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What changed in UNIVERSAL TECHNICAL INSTITUTE INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of UNIVERSAL TECHNICAL INSTITUTE INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+449 added−479 removedSource: 10-K (2023-12-01) vs 10-K (2022-12-12)

Top changes in UNIVERSAL TECHNICAL INSTITUTE INC's 2023 10-K

449 paragraphs added · 479 removed · 311 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

114 edited+81 added−74 removed38 unchanged
Biggest changeThe following tables set forth the most recent three-year cohort default rates for our institutions: Three-Year Cohort Default Rates for Cohort Years Ended September 30, (1) Institution: 2019 (2) 2018 2017 Universal Technical Institute of Arizona 3.1% 11.9% 13.8% Universal Technical Institute of Phoenix 3.7% 11.9% 14.0% Universal Technical Institute of Texas 2.7% 12.1% 16.1% MIAT College of Technology (3) 1.9% 15.4% 21.8% All proprietary postsecondary institutions (4) 3.1% 11.2% 14.7% (1) Based on information published by ED.
Biggest changeThis represents a three-year measuring period. 20 Table of Contents The following tables set forth the most recent three-year cohort default rates for our institutions: Three-Year Cohort Default Rates for Cohort Years Ended September 30, (1) Institution: 2020 (2) 2019 (2) 2018 Universal Technical Institute of Arizona 0% 3.1% 11.9% Universal Technical Institute of Phoenix 0% 3.7% 11.9% Universal Technical Institute of Texas 0% 2.7% 12.1% MIAT College of Technology (3)(4) 0% 1.9% 15.4% Concorde Career College - North Hollywood, California 0% 3.6% 8.8% Concorde Career College - San Diego, California 0% 3.7% 11.2% Concorde Career College - Garden Grove, California 0% 3.7% 10.6% Concorde Career College - San Bernardino, California 0% 4.9% 12.2% Concorde Career College - Aurora, Colorado and Dallas, Texas 0% 2.9% 14.2% Concorde Career College - Grand Prairie, Texas (3) 0% 6.7% 17.2% Concorde Career College - Kansas City, Missouri and San Antonio, Texas (3) 0% 4.2% 19.2% Concorde Career College - Memphis, Tennessee and Southaven, Mississippi (3) 0% 4.7% 16.8% Concorde Career Institute - Jacksonville, Florida and Orlando, Florida 0% 4.0% 13.6% Concorde Career Institute - Miramar, Florida (3) 0% 5.3% 18.0% Concorde Career Institute - Tampa, Florida 0% 3.7% 13.4% Concorde Career College - Portland, Oregon 0% 2.9% 9.3% All proprietary postsecondary institutions (5) 0% 3.1% 11.2% (1) Based on information published by ED.
The approvals granted by these entities permit our schools to operate and to participate in a variety of government-sponsored financial aid programs that assist students in paying for their education. The most significant of these is the federal student aid programs administered by the ED pursuant to HEA Title IV Programs.
The approvals granted by these entities permit our schools to operate and to participate in a variety of government-sponsored financial aid programs that assist students in paying for their education. The most significant of these is the federal student aid programs administered by ED pursuant to HEA Title IV Programs.
Program Year Established Program Focus Target Job Placement (1) Automotive 1965 Diagnose, service and repair automobiles Entry-level service technicians in automotive dealer service departments or automotive repair facilities Diesel 1968 Diagnose, service and repair diesel systems and industrial equipment Entry-level service technicians in medium and heavy truck facilities, truck dealerships, or in service and repair facilities Airframe and Powerplant 1969 Aircraft troubleshooting, hydraulics and pneumatics, powerplant lubrication systems and turbine engine operation Entry-level opportunities in various areas of the aviation industry Automotive/Diesel 1970 Diagnose, service and repair automobiles and diesel systems Entry-level service technicians in automotive repair facilities, automotive dealer service departments, diesel engine repair facilities, medium and heavy truck facilities, truck dealerships, or in service and repair facilities Motorcycle 1973 Diagnose, service and repair motorcycles and all-terrain vehicles Entry-level service technicians in motorcycle dealerships and independent repair facilities Marine 1991 Diagnose, service and repair boats Entry-level service technicians for marine dealerships and independent repair shops, as well as for marinas, boat yards and yacht clubs Collision Repair and Refinishing 1999 How to repair non-structural and structural automobile damage as well as how to prepare cost estimates on all phases of repair and refinishing Entry-level technicians at OEM dealerships and independent repair facilities 7 Table of Contents Program Year Established Program Focus Target Job Placement (1) NASCAR 2002 Automotive training along with additional NASCAR-specific elective courses Entry-level service technicians in automotive dealer service departments or automotive repair facilities, or opportunities in racing-related industries Energy Technology 2007 Associate of Applied Science degree which focuses on power generation, wind power, compression technology and powerplant operations Entry-level positions in the wind, nuclear, gas, coal, power distribution, or solar industries Industrial Maintenance 2007 Diagnose, service, test and repair various types of machinery Entry-level industrial maintenance technician in a wide range of industries including gas, coal, nuclear and solar industries Wind Power 2007 Diagnose, service and repair wind turbine towers Entry-level service technicians for the wind power industry Aviation Maintenance Technology 2012 Perform inspections, routine maintenance and repairs to keep aircraft in operating condition Entry-level service technicians in aviation repair stations and hangers, and on airfields Heating, ventilation, air conditioning and refrigeration (HVACR) 2012 An awareness of safety procedures, knowledge of heating and cooling, familiarity with tools used in the industry, and the ability to perform a variety of manual skills Entry-level service technicians in the heating and cooling industry Welding 2017 How to weld various materials using a wide range of welding processes Entry-level welders in the construction, structural, pipe, mechanical contracting and fabrication industries.
UTI Program Year Established Program Focus Target Job Placement (1) Automotive 1965 Diagnose, service and repair automobiles Entry-level service technicians in automotive dealer service departments or automotive repair facilities Diesel 1968 Diagnose, service and repair diesel systems and industrial equipment Entry-level service technicians in medium and heavy truck facilities, truck dealerships, or in service and repair facilities Airframe and Powerplant 1969 Aircraft troubleshooting, hydraulics and pneumatics, powerplant lubrication systems and turbine engine operation Entry-level opportunities in various areas of the aviation industry 6 Table of Contents UTI Program Year Established Program Focus Target Job Placement (1) Automotive/Diesel 1970 Diagnose, service and repair automobiles and diesel systems Entry-level service technicians in automotive repair facilities, automotive dealer service departments, diesel engine repair facilities, medium and heavy truck facilities, truck dealerships, or in service and repair facilities Motorcycle 1973 Diagnose, service and repair motorcycles and all-terrain vehicles Entry-level service technicians in motorcycle dealerships and independent repair facilities Marine 1991 Diagnose, service and repair boats Entry-level service technicians for marine dealerships and independent repair shops, as well as for marinas, boat yards and yacht clubs Collision Repair and Refinishing 1999 How to repair non-structural and structural automobile damage as well as how to prepare cost estimates on all phases of repair and refinishing Entry-level technicians at OEM dealerships and independent repair facilities NASCAR 2002 Automotive training along with additional NASCAR-specific elective courses Entry-level service technicians in automotive dealer service departments or automotive repair facilities, or opportunities in racing-related industries Energy Technology 2007 Associate of Applied Science degree which focuses on power generation, wind power, compression technology and powerplant operations Entry-level positions in the wind, nuclear, gas, coal, power distribution, or solar industries Industrial Maintenance 2007 Diagnose, service, test and repair various types of machinery Entry-level industrial maintenance technician in a wide range of industries including gas, coal, nuclear and solar industries Wind Power 2007 Diagnose, service and repair wind turbine towers Entry-level service technicians for the wind power industry Aviation Maintenance Technology 2012 Perform inspections, routine maintenance and repairs to keep aircraft in operating condition Entry-level service technicians in aviation repair stations and hangers, and on airfields Heating, ventilation, air conditioning and refrigeration (HVACR) 2012 An awareness of safety procedures, knowledge of heating and cooling, familiarity with tools used in the industry, and the ability to perform a variety of manual skills Entry-level service technicians in the heating and cooling industry Welding 2017 How to weld various materials using a wide range of welding processes Entry-level welders in the construction, structural, pipe, mechanical contracting and fabrication industries.
Our programs are also eligible for financial aid from federal sources other than Title IV Programs, such as the programs administered by the U.S. Department of Veterans Affairs (“VA”) and under the Workforce Innovation and Opportunity Act. Business Model and Industry Partnerships We serve students, partners and communities by providing quality education and training for in-demand careers.
Many of our programs also are eligible for financial aid from federal sources other than Title IV Programs, such as the programs administered by the U.S. Department of Veterans Affairs (“VA”) and under the Workforce Innovation and Opportunity Act. Business Model and Industry Partnerships We serve students, partners and communities by providing quality education and training for in-demand careers.
Reports of our executive officers, directors and any other persons required to file securities ownership reports under Section 16(a) of the Exchange Act are also available through our website. Information contained on our website is not a part of this Annual Report on Form 10-K and is not incorporated herein by reference. 21
Reports of our executive officers, directors and any other persons required to file securities ownership reports under Section 16(a) of the Exchange Act are also available through our website. Information contained on our website is not a part of this Annual Report on Form 10-K and is not incorporated herein by reference.
We employ field, military and campus-based admissions representatives who work directly with prospective students to facilitate the enrollment process. Additionally, each school has a support team that typically includes a campus president, an education director, a financial aid director, a student services director, and an career services director.
We employ field, military and campus-based admissions representatives who work directly with prospective students to facilitate the enrollment process. Additionally, each campus has a support team that typically includes a campus president, an education director, a financial aid director, a student services director, and a career services director.
Manufacturer-Paid MSATs A select number of students are offered manufacturer-paid MSATs, which are paid for by the manufacturer and/or its dealers in return for a commitment by the student to work for a dealer of that manufacturer for a certain period of time upon completion of the program.
UTI Manufacturer-Paid MSATs A select number of UTI students are offered manufacturer-paid MSATs, which are paid for by the manufacturer and/or its dealers in return for a commitment by the student to work for a dealer of that manufacturer for a certain period of time upon completion of the program.
Graduates may also secure positions outside of the Target Job Placement, including, for example, parts associate, service technician, fabricator, paint and preparation, and shop owner or operator, among others.
UTI graduates may also secure positions outside of the target job placement, including, for example, parts associate, service technician, fabricator, paint and preparation, and shop owner or operator, among others.
We have a Director of Diversity, Equity, and Inclusion who is responsible for setting the DE&I strategy and roadmap to ensure that we meet our objectives both internally, of creating a company where everyone feels they belong, and externally, by working closely with our marketing and talent acquisition function to attract diverse talent.
We have a Director of Diversity, Equity, and Inclusion who is responsible for setting the DE&I strategy and roadmap to ensure that we meet our objectives both internally, of creating a company where everyone feels they belong, and externally, by working closely with our marketing and talent acquisition functions to attract diverse talent.
Military base programs differ from our traditional MSATs in that the students do not complete our traditional core programs at a UTI campus before entering these advanced training programs. These programs range from 12 to 16 weeks and are available to all men and women transitioning out of the military. Candidates are interviewed and selected for these programs.
Military base programs differ from UTI’s traditional MSATs in that the students do not complete the traditional core programs at a UTI campus before entering these advanced training programs. These programs range from 12 to 16 weeks and are available to all men and women transitioning out of the military. Candidates are interviewed and selected for these programs.
ED Non-Discrimination Rulemakings As a condition of receiving federal financial assistance, we are responsible for complying with applicable laws and regulations promulgated by ED regarding non-discrimination. On July 12, 2022, ED published a proposed rule to amend the regulations implementing Title IX of the Education Amendments of 1972 (“Title IX”).
ED Non-Discrimination Rulemakings As a condition of receiving federal financial assistance, we are responsible for complying with applicable laws and regulations promulgated by ED regarding non-discrimination. On July 12, 2022, ED published a proposed rule to amend the regulations implementing Title IX of the Education Amendments of 1972.
We provide intensive instructional training and continuing education to our faculty members to maintain the quality of instruction in all fields of study. A majority of our existing instructors have a minimum of five years’ experience in the industry and an average of seven years of experience teaching at UTI.
We provide intensive instructional training and continuing education to our faculty members to maintain the quality of instruction in all fields of study. A majority of our existing instructors have a minimum of five years’ experience in the industry and an average of seven years of experience teaching at UTI and four years of experience teaching at Concorde.
All of our campuses are nationally accredited and are eligible for federal student financial assistance funds under the Higher Education Act of 1965, as amended (“HEA”), commonly referred to as Title IV Programs, which are administered by the U.S. Department of Education (“ED”).
All of our campuses are institutionally accredited and are eligible for federal student financial assistance funds under the Higher Education Act of 1965, as amended (“HEA”), commonly referred to as Title IV Programs, which are administered by the U.S. Department of Education (“ED”).
The table below provides an overview of the programs taught by UTI owned and operated institutions, including the year a program was first offered at one of our campuses, the focus of the program, and the type of employment the program was designed to prepare graduates to obtain.
The table below provides an overview of the programs taught by UTI owned and operated institutions, including the year a program was first offered at one of the campuses, the focus of the program, and the type of employment the program is designed to prepare graduates to obtain.
ED assesses the administrative capability of each institution that participates in Title IV Programs under a series of standards listed in the regulations, which cover a wide range of operational and administrative topics, including the designation of capable and qualified individuals, the quality and scope of written procedures, the adequacy of institutional communication and processes, the timely resolution of issues, the sufficiency of recordkeeping, and the frequency of findings of noncompliance, to name a few.
ED assesses the administrative capability of each institution that participates in Title IV Programs under a series of standards listed in the regulations, which cover a wide range of operational and administrative topics, including the designation of capable and qualified individuals, the quality and scope of written procedures, the adequacy of institutional communication and processes, the timely resolution of issues, the sufficiency of recordkeeping, and the frequency of findings of noncompliance.
In response to growing demand for trained technicians, our industry partners and employers are increasingly willing to participate in our students’ cost of education by providing them with scholarship money and relocation assistance to attend school and by offering our graduates tuition reimbursement plans and competitive compensation and benefit packages, including signing bonuses, relocation grants and tool incentives.
In response to growing demand for trained technicians, UTI industry partners and employers are increasingly willing to participate in the UTI students’ cost of education by providing them with scholarship money and relocation assistance to attend school and by offering UTI graduates tuition reimbursement plans and competitive compensation and benefit packages, including signing bonuses, relocation grants and tool incentives.
State Authorization To operate and offer postsecondary programs, and to be certified to participate in Title IV Programs, each of our institutions must obtain and maintain authorization from the state in which it is physically located (“Home State”).
State and Accreditor Approvals State Authorization To operate and offer postsecondary programs, and to be certified to participate in Title IV Programs, each of our institutions must obtain and maintain authorization from the state in which it is physically located (“Home State”).
If its 17 Table of Contents composite score is below 1.5, but at least 1.0, the institution is still considered to be financially responsible, but must agree to additional oversight by ED in the form of cash monitoring and other participation requirements. If an institution’s composite score is below 1.0, the institution is considered by ED to lack financial responsibility.
If its composite score is below 1.5, but at least 1.0, the institution is still considered to be financially responsible, but must agree to additional oversight by ED in the form of cash monitoring and other participation requirements. If an institution’s composite score is below 1.0, the institution is considered by ED to lack financial responsibility.
Location Brand Year Campus Opened Principal Programs Arizona (Avondale) UTI 1965 Automotive; Diesel; Welding Arizona (Avondale) (1) MMI 1973 Motorcycle California (Long Beach) UTI 2015 Automotive; Diesel; Collision Repair and Refinishing; Welding California (Rancho Cucamonga) UTI 1998 Automotive; Diesel; Welding California (Sacramento) UTI 2005 Automotive; Diesel Florida (Miramar) UTI 2022 Automotive; Diesel; Welding Florida (Orlando) UTI/MMI 1986 Automotive; Diesel; Motorcycle; Marine Illinois (Lisle) UTI 1988 Automotive; Diesel; Welding Michigan (Canton) MIAT 1969 Airframe and Powerplant; Aviation Maintenance; Energy; HVACR; Industrial Maintenance; Robotics & Automation; Wind Power; Welding New Jersey (Bloomfield) UTI 2018 Automotive; Diesel; Welding North Carolina (Mooresville) NASCAR Tech 2002 Automotive; NASCAR; CNC Machining; Welding Pennsylvania (Exton) UTI 2004 Automotive; Diesel; Welding 6 Table of Contents Location Brand Year Campus Opened Principal Programs Texas (Austin) UTI 2022 Automotive; Diesel; Welding Texas (Dallas/Ft.
UTI Location Brand Year Campus Opened Current Principal Programs Arizona (Avondale) UTI 1965 Airframe & Powerplant; Automotive; Diesel; Welding Arizona (Avondale) MMI 1973 Motorcycle California (Long Beach) UTI 2015 Airframe & Powerplant; Automotive; Diesel; Collision Repair and Refinishing; Welding California (Rancho Cucamonga) UTI 1998 Automotive; Diesel; Industrial Maintenance; Robotics & Automation; Welding; Wind Power California (Sacramento) UTI 2005 Automotive; Diesel; Welding Florida (Miramar) UTI 2022 Automotive; Diesel; Welding Florida (Orlando) UTI/MMI 1986 Automotive; Diesel; Motorcycle; Marine Illinois (Lisle) UTI 1988 Automotive; Diesel; Industrial Maintenance; Robotics & Automation; Welding; Wind Power Michigan (Canton) MIAT 1969 Airframe and Powerplant; Aviation Maintenance; Energy; HVACR; Industrial Maintenance; Robotics & Automation; Wind Power; Welding New Jersey (Bloomfield) UTI 2018 Automotive; Diesel; Welding North Carolina (Mooresville) NASCAR Tech 2002 Automotive; CNC Machining; HVACR; NASCAR; Robotics & Automation; Welding Pennsylvania (Exton) UTI 2004 Automotive; Diesel; Robotics & Automation; Welding Texas (Austin) UTI 2022 Automotive; Diesel; HVACR; Welding Texas (Dallas/Ft.
Because all of our institutions are certified to participate in Title IV Programs, they must all comply with this complex framework of statutes, 15 Table of Contents regulations, and guidance, and undergo detailed oversight and review. Below, we discuss the core components of the Title IV Programs’ regulatory framework.
Because all of our institutions are certified to participate in Title IV Programs, they must all comply with this complex framework of statutes, regulations, and guidance, and undergo detailed oversight and review. Below, we discuss the core components of the Title IV Programs’ regulatory framework.
Substantial Misrepresentation The regulatory definitions of “misrepresentation” and “substantial misrepresentation” enforced by ED are exceptionally broad and do not require intent by the institution to misrepresent, or actual reliance by the person to whom the alleged misrepresentation was made.
Substantial Misrepresentation The regulatory definitions of “misrepresentation” and “substantial misrepresentation” enforced by ED are exceptionally broad and do not require intent by the institution to misrepresent, or actual reliance by the person to whom the alleged 22 Table of Contents misrepresentation was made.
Title IV Programs The federal government provides a substantial part of its support for postsecondary education through Title IV Programs in the form of grants and loans to students who can use those funds at any institution that has been certified as eligible to participate by ED. All of our institutions are certified to participate in Title IV Programs.
Title IV Programs The federal government provides a substantial part of its support for postsecondary education through Title IV Programs in the form of grants and loans to students who can use those funds at any institution that has been certified as eligible to participate by ED.
At this 14 Table of Contents time, we cannot predict all or any of the changes that Congress may ultimately make, and any of those changes could potentially have a material adverse effect on our business and operations.
At this time, we cannot predict all or any of the changes that Congress may ultimately make, and any of those changes could potentially have a material adverse effect on our business and operations.
We currently offer the following military base programs using vehicles, equipment, specialty tools and curricula provided by and/or developed in collaboration with certain manufacturer brand partners: Military Base Programs Offered Location BMW Military Service Technician Education Program Marine Corps Base Camp Pendleton in California U.S.
UTI currently offers the following military base programs using vehicles, equipment, specialty tools and curricula provided by and/or developed in collaboration with certain manufacturer brand partners: UTI Military Base Programs Offered Location BMW Military Service Technician Education Program Marine Corps Base Camp Pendleton in California U.S.
Manufacturer Specific Advanced Training (“MSAT”) Programs In addition to the program offerings noted above, we also offer advanced training programs in the form of manufacturer-paid post-graduate MSAT programs and in the form of student-paid MSAT courses, which may be added as electives to a student’s core automotive, diesel or motorcycle program.
UTI Manufacturer Specific Advanced Training (“MSAT”) Programs In addition to the program offerings noted above, UTI also offers advanced training programs in the form of manufacturer-paid post-graduate MSAT programs and in the form of student-paid MSAT courses, which may be added as electives to a student’s core automotive, diesel or motorcycle program.
Entry-level technician in a variety of industries Non-Destructive Testing 2019 Training in the discipline focused on the quality and serviceability of materials and structures Entry-level technicians in a variety of industries, from oil and gas and manufacturing to power generation and aviation (1) Target job placement describes the type of employment the program was designed to prepare graduates to obtain.
Entry-level technician in a variety of industries Non-Destructive Testing 2019 Training in the discipline focused on the quality and serviceability of materials and structures Entry-level technicians in a variety of industries, from oil and gas and manufacturing to power generation and aviation 7 Table of Contents (1) Target job placement describes the type of employment the program is designed to prepare graduates to obtain.
In 2022, we derived approximately 13% of our revenues, on a cash basis, from veterans’ benefits programs, which include the Post-9/11 GI Bill, the Montgomery GI Bill, the Reserve Education Assistance Program (“REAP”) and VA Vocational Rehabilitation.
In 2023, we derived approximately 10% of our revenues, on a cash basis, from veterans’ benefits programs, which include the Post-9/11 GI Bill, the Montgomery GI Bill, the Reserve Education Assistance Program (“REAP”) and VA Vocational Rehabilitation.
As demonstrated in the table above, none of our institutions had a three-year cohort default rate of 30% or greater for 2019, 2018 or 2017, for the three most recent FFYs with published rates.
As demonstrated in the table above, none of our institutions had a three-year cohort default rate of 30% or greater for 2020, 2019, or 2018, which are the three most recent FFYs with published rates.
We are focused on making our training more affordable and accessible through financing options, proprietary loans, institutional and relocation grants, scholarships based on need and merit, and employer sponsored training and tuition reimbursement.
We are focused on making our training more affordable and accessible for the UTI students through financing options, proprietary loans, institutional and relocation grants, scholarships based on need and merit, and employer sponsored training and tuition reimbursement.
Certain of our campuses are required to obtain permits for our air emissions. In the event we do not maintain compliance with any of these laws and regulations, or if we are responsible for a spill or release of hazardous materials, we could incur significant costs for clean-up, damages, and fines or penalties.
Certain of the UTI campuses are required to obtain permits for air emissions. In the event UTI does not maintain compliance with any of these laws and regulations, or if UTI is responsible for a spill or release of hazardous materials, UTI could incur significant costs for clean-up, damages, and fines or penalties.
Student-Paid MSATs We currently offer the following student-paid MSAT programs using vehicles, equipment, specialty tools and curricula provided by and/or developed in collaboration with our manufacturer brand partners: Student-Paid MSAT Programs Offered Location UTI and NASCAR Tech Campuses BMW FastTrack (1) Avondale, Exton, Houston, Long Beach, Orlando Cummins Engines Avondale, Exton, Houston Cummins Power Generation Avondale Daimler Trucks Finish First Program Avondale, Lisle, Orlando Ford Accelerated Credential Training (FACT) Avondale, Rancho Cucamonga, Sacramento, Orlando, Lisle, Mooresville, Bloomfield, Exton, Houston General Motors Technician Career Training Avondale Mopar TEC by Fiat Chrysler Automobiles US LLC Mooresville Toyota Professional Automotive Technician (TPAT) Lisle, Rancho Cucamonga MMI Campuses American Honda Motor Company, Inc.
UTI currently offers the following student-paid MSAT programs using vehicles, equipment, specialty tools and curricula provided by and/or developed in collaboration with its manufacturer brand partners: UTI Student-Paid MSAT Programs Offered Location UTI and NASCAR Tech Brand Campuses BMW FastTrack Avondale, Exton, Houston, Long Beach, Orlando, Lisle, Miramar Cummins Engines Avondale, Exton, Houston Cummins Power Generation Avondale Daimler Trucks Finish First Program Avondale, Lisle, Orlando Ford Accelerated Credential Training (FACT) Avondale, Rancho Cucamonga, Sacramento, Orlando, Lisle, Mooresville, Bloomfield, Exton, Houston General Motors Technician Career Training Avondale Mopar TEC by Fiat Chrysler Automobiles US LLC Mooresville Toyota Professional Automotive Technician (TPAT) Lisle, Rancho Cucamonga 8 Table of Contents UTI Student-Paid MSAT Programs Offered Location MMI Brand Campuses American Honda Motor Company, Inc.
We also have a centralized department whose focus is to build and maintain relationships with potential and existing national employers and develop graduate job opportunities and, where possible, relocation assistance, sign-on bonuses, tool packages and tuition reimbursement plans with our manufacturer brand partners and other industry employers.
We also have centralized departments for each segment whose focus is to build and maintain relationships with potential and existing national employers and develop graduate job opportunities and, where possible, relocation assistance, sign-on bonuses, tool packages and tuition reimbursement plans with our manufacturer brand partners and other industry employers.
Pursuant to this definition, ED recognizes UTI as owning and operating four institutions (“OPE IDs”), organized as follows: Institution: Universal Technical Institute of Arizona Main campus: Universal Technical Institute, Avondale, Arizona Additional campuses: Universal Technical Institute, Lisle, Illinois Universal Technical Institute, Long Beach, California Universal Technical Institute, Miramar, Florida Universal Technical Institute, Rancho Cucamonga, California NASCAR Technical Institute, Mooresville, North Carolina Institution: Universal Technical Institute of Phoenix Main campus: Universal Technical Institute DBA Motorcycle Mechanics Institute, Motorcycle & Marine Mechanics Institute, Avondale, Arizona Additional campuses: Universal Technical Institute, Sacramento, California Universal Technical Institute, Orlando, Florida for the following divisions: Motorcycle Mechanics Institute, Orlando, Florida Marine Mechanics Institute, Orlando, Florida Automotive, Orlando, Florida Institution: Universal Technical Institute of Texas Main campus: Universal Technical Institute, Houston, Texas Additional campuses: Universal Technical Institute, Exton, Pennsylvania Universal Technical Institute, Dallas/Ft.
Pursuant to this definition, ED recognizes the Company as owning and operating sixteen institutions (“OPE IDs”), organized as follows: 18 Table of Contents Institution Main Campus Additional Campuses (if any) Universal Technical Institute of Arizona Universal Technical Institute, Avondale, Arizona Universal Technical Institute, Lisle, Illinois; Universal Technical Institute, Long Beach, California; Universal Technical Institute, Miramar, Florida; Universal Technical Institute, Rancho Cucamonga, California; NASCAR Technical Institute, Mooresville, North Carolina Universal Technical Institute of Phoenix Universal Technical Institute DBA Motorcycle Mechanics Institute, Motorcycle & Marine Mechanics Institute, Avondale, Arizona Universal Technical Institute, Sacramento, California; Universal Technical Institute, Orlando, Florida for the following divisions: Motorcycle Mechanics Institute, Orlando, Florida; Marine Mechanics Institute, Orlando, Florida; Automotive, Orlando, Florida Universal Technical Institute of Texas Universal Technical Institute, Houston, Texas Universal Technical Institute, Exton, Pennsylvania; Universal Technical Institute, Dallas/Ft.
ED calculates an institution’s cohort default rate on an annual basis. Under the current calculation, the cohort default rate is derived from student borrowers who first enter loan repayment during a federal fiscal year (“FFY”) ending September 30 and subsequently default on those loans within the two following years; parent borrowers are excluded from the calculation.
Under the current calculation, the cohort default rate is derived from student borrowers who first enter loan repayment during a federal fiscal year (“FFY”) ending September 30 and subsequently default on those loans within the two following years; parent borrowers are excluded from the calculation.
We have made adjustments to the compensation practices for our admissions representatives which we believe comply with the current regulations and ED’s guidance. We will continue to evaluate other compensation options under these regulations and guidance.
We believe our compensation practices for our admissions representatives comply with the current regulations and ED’s guidance. We will continue to evaluate other compensation options under these regulations and guidance.
We, along with 69 other proprietary institutions, received an October 6, 2021 letter from the FTC providing notice that engaging in deceptive or unfair conduct in the education marketplace violates consumer protection laws and could lead to significant civil penalties.
Both UTI and Concorde, along with 68 other proprietary institutions, received an October 6, 2021 letter from the FTC providing notice that engaging in deceptive or unfair conduct in the education marketplace violates consumer protection laws and could lead to significant civil penalties.
We believe our management team has the experience necessary to effectively implement our growth and diversification strategy and continue to drive positive educational and employment outcomes for our students. For discussion of the risks relating to the attraction and retention of management and executive management employees, see Item 1A.
We believe our corporate and divisional management teams have the experience necessary to effectively implement our growth and diversification strategy and continue to drive positive educational and employment outcomes for our students. For discussion of the risks relating to the attraction and retention of management and executive management employees, see Item 1A.
We believe our industry-focused educational model and national presence have enabled us to develop valuable industry relationships, which provide us with significant competitive advantages and supports our market leadership, along with enabling us to provide highly specialized education to our students, resulting in enhanced employment opportunities and the potential for higher wages for our graduates.
We believe the UTI industry-focused educational model and national presence has enabled the UTI division to develop valuable industry relationships, which provide it with significant competitive advantages and supports its market leadership, along with enabling the division to provide highly specialized education to its students, resulting in enhanced employment opportunities and the potential for higher wages for its graduates.
In fiscal year 2022, we derived approximately 67% of our revenues, on a cash basis as defined by ED, from Title IV Programs. We derived approximately 49% of our revenues, on a cash basis, from the Direct Loan program, pursuant to which ED makes loans to students or their parents.
Overall, in fiscal year 2023, across our institutions, we derived approximately 67% of our revenues, on a cash basis as defined by ED, from Title IV Programs. We derived approximately 46% of our revenues, on a cash basis, from the Direct Loan program, pursuant to which ED makes loans to students or their parents.
An institution whose cohort default rate exceeds 30% in consecutive fiscal years may be subject to conditions and restrictions, and will lose eligibility if the rate remains above 30% three years in a row. An institution also will lose eligibility if its rate exceeds 40% for any fiscal year.
(5) Includes other proprietary institutions beyond the Company. An institution whose cohort default rate exceeds 30% in consecutive fiscal years may be subject to conditions and restrictions and will lose eligibility if the rate remains above 30% three years in a row. An institution also will lose eligibility if its rate exceeds 40% for any fiscal year.
We currently offer the following manufacturer-paid MSAT programs using vehicles, equipment, specialty tools and curricula provided by our manufacturer brand partners: Manufacturer-Paid MSAT Programs Offered Location Fendt Technician Academy by AGCO Lisle Mercedes-Benz DRIVE Mercedes-Benz facilities in Long Beach, California, Jacksonville, Florida, Robbinsville, New Jersey and Grapevine, Texas Peterbilt Technician Institute Lisle, Dallas/Ft.
UTI currently offers the following manufacturer-paid MSAT programs using vehicles, equipment, specialty tools and curricula provided by its manufacturer brand partners: UTI Manufacturer-Paid MSAT Programs Offered Location Fendt Technician Academy by AGCO Lisle, Illinois Mercedes-Benz DRIVE Mercedes-Benz facilities in Long Beach, California; Jacksonville, Florida; Carol Stream, Illinois; Robbinsville, New Jersey; and Grapevine, Texas Peterbilt Technician Institute Lisle, Illinois; Dallas/Ft.
On November 1, 2022, ED published a final rule governing borrower defense to repayment rule, closed school loan discharges, pre-dispute arbitration and class action waiver clauses, interest capitalization on Federal student loans, Public Student Loan Forgiveness, total and permanent disability discharges, and false certification discharges, also effective July 1, 2023.
On November 1, 2022, ED published a final rule governing borrower defense to repayment claims, closed school loan discharges, pre-dispute arbitration and class action waiver clauses, interest capitalization on Federal student loans, Public Student Loan Forgiveness, total and permanent disability discharges, and false certification discharges, also effective July 1, 2023. • On October 10, 2023, ED published a final rule related to financial value transparency and gainful employment, effective July 1, 2024.
Human Capital Management As of September 30, 2022, we had approximately 1,950 full-time employees, including approximately 650 instructors, 350 admissions representatives, and 600 student support employees. Each of our employees plays a key role in our mission to serve students, partners and communities by providing quality education and training for in-demand careers.
Human Capital Management As of September 30, 2023, we had approximately 3,000 full-time employees, including approximately 850 instructors, 550 admissions representatives, and 1,100 student support employees. Each of our employees plays a key role in our mission to serve students, partners and communities by providing quality education and training for in-demand careers.
Accreditation Accreditation is a non-governmental process through which an institution voluntarily submits to ongoing qualitative reviews by an organization of peer institutions. Institutional accreditation by an ED-recognized accreditor is required for an institution to be certified to participate in Title IV Programs.
Institutional Accreditation Institutional accreditation is a non-governmental process through which an institution voluntarily submits to ongoing qualitative reviews by an organization of peer institutions. Institutional accreditation by an ED-recognized accreditor is required for an institution to be certified to participate in Title IV Programs. All of the UTI institutions and 14 of the Concorde institutions are accredited by the ACCSC.
As a result, our facilities and operations are subject to a variety of environmental laws and regulations governing, among other things, the use, storage and disposal of solid and hazardous substances and waste, and the clean-up of contamination at our 12 Table of Contents facilities or off-site locations to which we send or have sent waste for disposal.
As a result, the UTI facilities and operations are subject to a variety of environmental laws and regulations governing, among other things, the use, storage and disposal of solid and hazardous substances and waste, and the clean-up of contamination at UTI facilities or off-site locations to which UTI sends or has sent waste for disposal.
Our industry relationships also extend to thousands of local employers, after-market retailers, fleet service providers and enthusiast organizations.
The industry relationships for the UTI division also extend to thousands of local employers, after-market retailers, fleet service providers and enthusiast organizations.
ED has required us to provide certain information on a regular basis following our issuance of preferred stock on July 15, 2016, and we continue to provide monthly reports to ED pursuant to such direction. For our year ended September 30, 2022, we calculated our composite score to be 2.3.
ED has required us to provide certain information on a regular basis following our issuance of preferred stock on June 24, 2016, and we continue to provide monthly reports to ED pursuant to such direction. For our year ended September 30, 2023, we calculated our composite score to be 1.6.
The composite score is based on three ratios: (1) the equity ratio which measures the institution’s capital resources, ability to borrow and financial viability; (2) the primary reserve ratio which measures the institution’s ability to support current operations from expendable resources; and (3) the net income ratio which measures the institution’s ability to operate at a profit.
The composite score utilizes information provided in the institutions’ annual audited financial statements and is based on three ratios: (1) the equity ratio which measures the institution’s capital resources, ability to borrow and financial 21 Table of Contents viability; (2) the primary reserve ratio which measures the institution’s ability to support current operations from expendable resources; and (3) the net income ratio which measures the institution’s ability to operate at a profit.
To ensure our programs provide students with the necessary hard and soft skills needed upon graduation, we have relationships with over 35 original equipment manufacturers (“OEMs”) and industry brand partners across the country to understand their needs for qualified service professionals. Through our industry relationships, we are able to continuously refine and expand our programs and curricula.
Industry Partnerships To ensure the UTI programs provide students with the necessary hard and soft skills needed upon graduation, UTI has relationships with multiple original equipment manufacturers (“OEMs”) and industry brand partners across the country to understand their needs for qualified service professionals. Through these industry relationships, UTI is able to continuously refine and expand its programs and curricula.
As of September 30, 2022, Universal Technical Institute of Texas and MIAT College of Technology were subject to a 30-day delay in receiving the first disbursement on federal student loans for first-time borrowers due to a three-year cohort default rate that was 15% or greater for one of the three most recent years.
(3) As of September 30, 2023, these institutions were subject to a 30-day delay in receiving the first disbursement on federal student loans for first-time borrowers due to a three-year cohort default rate that was 15% or greater for one of the three most recent years.
Shortly thereafter, between January and March 2022, the Institutional and Programmatic Eligibility committee considered new rules relating to seven issue areas: (1) the 90/10 rule, (2) ability to benefit, (3) certification procedures for participation in Title IV Programs, (4) change of ownership and control, (5) financial responsibility, (6) gainful employment, and (7) standards of administrative capability.
Shortly thereafter, between January and March 2022, the Institutional and Programmatic Eligibility committee considered new rules relating to seven issue areas: (1) the 90/10 rule, (2) ability to benefit, (3) certification procedures for participation in Title IV Programs, (4) change of ownership and control, (5) financial responsibility, (6) gainful employment, and (7) standards of administrative capability. • On October 28, 2022, ED published a final rule amending regulations governing Pell Grants for prison education programs, the 90/10 rule, and changes in ownership and control, effective July 1, 2023.
Currently, ED is conducting two significant, negotiated rulemaking efforts to revise rules concerning 16 different issue areas. 19 Table of Contents Between October and December of 2021, the Affordability and Student Loans committee negotiated new rules relating to nine issue areas: (1) borrower defense to repayment, (2) closed school loan discharges, (3) total and permanent disability discharges, (4) false certification discharges, (5) income-driven loan repayment plans, (6) interest capitalization on Federal student loans, (7) pre-dispute arbitration and class action waiver clauses, (8) Pell Grants for prison education programs, and (9) Public Service Loan Forgiveness.
ED has recently undertaken, or proposed to undertake, rulemakings on the following topics: • Between October and December of 2021, the Affordability and Student Loans committee negotiated new rules relating to nine issue areas: (1) borrower defense to repayment, (2) closed school loan discharges, (3) total and permanent disability discharges, (4) false certification discharges, (5) income-driven loan repayment plans, (6) interest capitalization on Federal student loans, (7) pre-dispute arbitration and class action waiver clauses, (8) Pell Grants for prison education programs, and (9) Public Service Loan Forgiveness.
Many states have requirements for institutions to disclose institutional data to current and prospective students, as well as to the public, and some states require that our schools meet prescribed performance standards as a condition of continued approval. States can and often do revisit, revise, and expand their regulations governing postsecondary education and recruiting.
Many states have requirements for institutions to disclose institutional data to current and prospective students, as well as to the public, and some states require that our schools meet prescribed performance standards as a condition of continued approval.
Eligibility and Recertification All institutions participating in the Title IV Programs must first establish their eligibility to do so. The Program Participation Agreement (“PPA”) document serves as ED’s formal recognition that an institution and its associated additional locations have satisfied this requirement, and are authorized to participate in Title IV Programs for a specified period of time.
The Program Participation Agreement (“PPA”) document serves as ED’s formal recognition that an institution and its associated additional locations 19 Table of Contents have satisfied this requirement and are authorized to participate in Title IV Programs for a specified period of time.
An institution whose three-year cohort default rate is 15% or greater for any one of the three preceding years is subject to a 30-day delay in receiving the first disbursement on federal student loans for first-time borrowers.
An institution whose three-year cohort default rate is 15% or greater for any one of the three preceding years is subject to a 30-day delay in receiving the first disbursement on federal student loans for first-time borrowers. Financial Responsibility All institutions participating in Title IV Programs also must satisfy specific ED standards of financial responsibility.
The regulated community is awaiting proposed rules on the remaining topics covered by ED’s negotiated rulemakings. We devote significant effort to understanding the effects of ED regulations and rulemakings on our business and to developing compliant solutions that also are congruent with our business, culture, and mission to serve our students and industry relationships.
We devote significant effort to understanding the effects of ED regulations and rulemakings on our business and to developing compliant solutions that also are congruent with our business, culture, and mission to serve our students and industry relationships.
“ Risk Factors.” Environmental Matters We use hazardous materials at our training facilities and campuses and generate small quantities of regulated waste, including, but not limited to, used oil, antifreeze, transmission fluid, paint, solvents, car batteries and aircraft batteries.
“Risk Factors.” 14 Table of Contents Environmental Matters UTI uses hazardous materials at its training facilities and campuses and generates small quantities of regulated waste, including, but not limited to, used oil, antifreeze, transmission fluid, paint, solvents, car batteries and aircraft batteries.
Consumer Protections Laws and Regulations As a postsecondary educational institution, we are subject to a broad range of consumer protection and other laws, such as recruiting, marketing, the protection of personal information, student financing and payment servicing, enforced by federal agencies such as the FTC and CFPB and various state agencies and state attorneys general.
Consumer Protections Laws and Regulations As a postsecondary educational institution, we are subject to a broad range of consumer protection and other laws, such as those that relate to recruiting, marketing, the protection of personal information, student financing and payment servicing.
Our national career services team develops job opportunities and outreach, while our local career services teams advise active students on employment search and interviewing skills, facilitate employer visits to campuses, provide access to reference materials and assist with the composition of resumes.
Our career services teams develop job opportunities and outreach, advise active students on employment search and interviewing skills, facilitate employer visits to campuses, provide access to reference materials, assist with the composition of resumes, and help students prepare for applicable certification or licensure exams.
DOL BLS”) estimates that an average of approximately 117,000 new job openings, due to growth and net replacements, will exist annually for newly trained technicians in the automotive, diesel, and collision fields through 2031. Additionally, the U.S.
The United States Department of Labor Bureau of Labor Statistics (“U.S. DOL BLS”) estimates that an average of approximately 105,400 new job openings, due to growth and net replacements, will exist annually for newly trained technicians in the automotive, diesel, and collision fields through 2031. Additionally, for skilled trades and other transportation programs, the U.S.
Worth, Texas (1) March 2023 In Process Est FY23 Sacramento, California (1) December 2023 Renewed March 2017 Mooresville, North Carolina; NASCAR Technical Institute (NASCAR Tech) (1) December 2024 Renewed July 2018 Avondale, Arizona (1) February 2025 Renewed February 2019 Orlando, Florida (1) February 2025 Renewed August 2018 Houston, Texas (1) February 2025 Renewed September 2018 Lisle, Illinois (1) February 2025 Renewed December 2018 Rancho Cucamonga, California (1) February 2025 Renewed March 2019 Avondale, Arizona; Motorcycle Mechanics Institute (MMI) (1) May 2025 Renewed April 2019 Bloomfield, New Jersey (2) May 2025 Renewed December 2019 Canton, Michigan (MIAT) (2) July 2026 Renewed October 2021 Austin, Texas (3) May 2024 Approved Est FY25 Miramar, Florida (3) September 2024 Approved Est FY25 (1) Indicates a school that has achieved School of Excellence status during its most recent renewal of accreditation, which recognizes ACCSC-accredited institutions for their commitment to the expectations and rigors of ACCSC accreditation, as well as the efforts made by the institution in maintaining high levels of achievement among their students.
Worth, Texas (2) March 2023 In Process Sacramento, California (2) December 2023 In Process Mooresville, North Carolina; NASCAR Technical Institute (NASCAR Tech) (2) December 2024 Renewed Avondale, Arizona (2) February 2025 Renewed Orlando, Florida (2) February 2025 Renewed Houston, Texas (2) February 2025 Renewed Lisle, Illinois (2) February 2025 Renewed Rancho Cucamonga, California (2) February 2025 Renewed Avondale, Arizona; Motorcycle Mechanics Institute (MMI) (2) May 2025 Renewed Bloomfield, New Jersey (1) May 2025 Renewed Canton, Michigan (MIAT) (1) July 2026 Renewed Long Beach, California (1) September 2027 Renewed Exton, Pennsylvania (2) October 2028 Renewed Austin, Texas (3) May 2024 Approved Miramar, Florida (3) September 2024 Approved (1) Indicates a school that has achieved School of Distinction status during its most recent renewal of accreditation, which recognizes accredited member schools that demonstrated a commitment to the expectations and rigors of ACCSC accreditation, as well as a commitment to delivering quality educational programs to students.
To assist these students in graduating, we employ student service professionals that provide tutoring, and academic, financial, personal, and employment advisement. Additionally, as our campus locations do not offer housing for students, we have service professionals who leverage third-party relationships and assist our students in finding affordable housing near our campuses.
Additionally, as our campus locations do not offer housing for students, we have service professionals who leverage third-party relationships and assist our students in finding affordable housing near our campuses.
Accordingly, we dedicate significant resources to maintaining an effective career services team. Our campus-based staff facilitate several career development processes, including instruction and coaching for interview skills, interview etiquette and professionalism. Additionally, the career services team provides students with reference materials and assistance with the composition of resumes.
Our campus-based staff facilitate several career development processes, including instruction and coaching for interview skills, interview etiquette and professionalism. Additionally, the career services team provides students with reference materials and assistance with the composition of resumes. Finally, we place emphasis on and devote significant time to assisting students with part-time and graduate job searches.
Failure to satisfy any of the standards may lead ED to find the institution ineligible to participate in Title IV Programs, require the institution to repay Title IV Program funds, change the method of payment of Title IV Program funds, place the institution on provisional certification as a condition of its continued participation or take other actions against the institution. 16 Table of Contents Three-Year Student Loan Default Rates To remain eligible to participate in Title IV Programs, institutions also must maintain federal student loan cohort default rates below specified levels.
Failure to satisfy any of the standards may lead ED to find the institution ineligible to participate in Title IV Programs, require the institution to repay Title IV Program funds, change the method of payment of Title IV Program funds, place the institution on provisional certification as a condition of its continued participation in Title IV Programs, or take other actions against the institution.
Army Base Fort Bragg in North Carolina Penske Premier Truck Group Technician Skills Program Fort Bliss in El Paso, Texas Affordability and Accessibility During the year ended September 30, 2022, tuition at our UTI, MMI and NASCAR Tech campuses ranged from approximately $20,000 for our CNC program (lasting 36 weeks) to $60,000 for our Automotive and Diesel program with one specialized elective program (lasting 90 weeks).
Army Base Fort Liberty in North Carolina Penske Premier Truck Group Technician Skills Program Fort Bliss in El Paso, Texas UTI Affordability and Accessibility During the year ended September 30, 2023, tuition for UTI programs ranged from approximately $19,000 for the Industrial Maintenance Technician or Wind Turbine Technician programs (lasting 30 weeks) to $65,000 for the Automotive and Diesel program with one specialized elective program (lasting 90 weeks).
Our institutions are also authorized to participate in the State Authorization Reciprocity Agreement (“SARA”). SARA is an agreement among member states, districts and territories that establishes comparable national standards for interstate offering of post-secondary distance education courses and programs. SARA is overseen by a national council (“NC-SARA”) and administered by four regional education compacts.
All UTI institutions and the Concorde Kansas City and Memphis institutions are authorized to participate in the State Authorization Reciprocity Agreement (“SARA”). SARA is an agreement among member states, districts and territories of the United States of America that establishes comparable national standards for interstate offering of post-secondary distance education courses and programs.
The 90/10 Rule As a condition of participation in Title IV Programs, proprietary institutions must agree when they sign their PPA to comply with the 90/10 rule.
A provisional PPA attaches additional requirements and limitations to participation for the duration of the provisional period, which typically is three years. The 90/10 Rule As a condition of participation in Title IV Programs, proprietary institutions must agree when they sign their PPA to comply with the 90/10 rule.
We continue to evolve our business model to provide our students with accessible, affordable training with a focus on bringing education to the students at convenient locations. The market for qualified service technicians across the programs that we offer is large and growing. The United States Department of Labor Bureau of Labor Statistics (“U.S.
We continue to evolve our business model to provide our students with accessible, affordable training with a focus on bringing education to the students at convenient locations. Market served by UTI The market for qualified transportation or skilled trades technicians across the programs that UTI offers is large and growing.
Additionally, we have received permanent approvals from all state education authorizing agencies to offer blended format programs. Title IV Program Rulemaking ED is almost continuously engaged in one or more negotiated rulemakings, which is the process pursuant to which the agency revisits, revises, and expands the complex and voluminous Title IV Program regulations.
Title IV Program Rulemakings ED is almost continuously engaged in one or more negotiated rulemakings, which is the process pursuant to which the agency revisits, revises, and expands the complex and voluminous Title IV Program regulations.
ED’s regulations permit ED to examine the financial statements of Universal Technical Institute, Inc., the financial statements of each institution and the financial statements of any related party. ED has not required us currently to post a letter of credit on behalf of any of our schools.
ED’s regulations permit ED to examine the financial statements of Universal Technical Institute, Inc., the financial statements of each institution and the financial statements of any related party.
As of September 2022, 49 states (all but California), the District of Columbia, Puerto Rico and the U.S. Virgin Islands have joined SARA. Each of our institutions holds the state and/or SARA authorizations required to operate and offer postsecondary education programs, and to recruit in the states in which it engages in recruiting activities.
Each of our institutions holds the state or SARA authorizations required to operate and offer postsecondary education programs, and to recruit in the states in which it engages in recruiting activities.
We provide relevant services to assist students with possible tuition financing options, educational and career counseling, opportunities for part-time work while attending school, and ultimately, graduate employment.
As a result, we believe we are well positioned to better meet the market’s demand for skilled technicians and healthcare workers. In addition, we provide relevant services to assist students with possible tuition financing options, educational and career counseling, opportunities for part-time work while attending school, and ultimately graduate employment.
Prospective students may choose to forego additional education and enter the workforce directly, especially during periods when the unemployment rate declines or remains stable as it has in recent years. This may include employment with our industry partners or with other manufacturers and employers of our graduates.
Other competitive factors that influence our ability to attract new students include the employment market, community colleges, other career-oriented and technical schools, and the military. Prospective students may choose to forego additional education and enter the workforce directly, especially during periods when the unemployment rate declines or remains stable as it has in recent years.
With the exception of our two newest campuses in Austin, Texas and Miramar, Florida which opened between May and August 2022, all of our campuses are eligible to participate in VA education benefit programs. 20 Table of Contents In 2012, President Obama signed an Executive Order directing the DOD, VA and ED to establish “Principles of Excellence” (“Principles”), based on certain guidelines set forth in the Executive Order, to apply to educational institutions receiving federal funding for service members, veterans and family members.
In 2012, President Obama signed an Executive Order directing the DOD, VA and ED to establish “Principles of Excellence” (“Principles”), based on certain guidelines set forth in the Executive Order, to apply to educational institutions receiving federal funding for service members, veterans and family members.
Administrative Capability To continue its participation in Title IV Programs, an institution must demonstrate that it remains administratively capable of providing the education it promises and of properly managing the Title IV Programs.
As of September 30, 2023, our institutions’ annual Title IV percentages as calculated under the current 90/10 rule ranged from approximately 57% to approximately 86%. Administrative Capability To continue its participation in Title IV Programs, an institution must demonstrate that it remains administratively capable of providing the education it promises and of properly managing its Title IV Programs.
All of our institutions are accredited by the Accrediting Commission of Career Schools and Colleges (“ACCSC”), which is an accrediting agency recognized by ED. 13 Table of Contents ACCSC reviews the academic quality of each institution’s instructional programs, as well as the administrative and financial operations of the institution to ensure that it has the resources necessary to perform its educational mission, implement continuous improvement processes, and support student success.
ACCSC and COE review the academic quality of each institution’s instructional programs, as well as the administrative and financial operations of the institution to ensure that it has the resources necessary to perform its educational mission, implement continuous improvement processes, and support student success.
Our institutions must submit annual reports, and at times, supplemental reports, to demonstrate ongoing compliance and improvement. ACCSC requires institutions to disclose certain institutional information to current and prospective students, as well as to the public, and requires that our schools and programs meet various performance standards as a condition of continued accreditation.
ACCSC and COE require institutions to disclose certain institutional information to current and prospective students, as well as to the public, and require that our schools and programs meet various performance standards as a condition of continued accreditation. ACCSC and COE often revisit, revise, and expand their standards and policies.
Additionally, we offer manufacturer specific advanced training (“MSAT”) programs, including student-paid electives, at our campuses and manufacturer or dealer sponsored training at certain campuses and dedicated training centers. 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 offer the majority of our programs in a blended learning model that combines instructor-facilitated online teaching and demonstrations with hands-on labs.
DOL BLS estimates that an average of 42,500 new jobs openings for industrial machinery mechanics, 47,600 new job openings for welders, 40,100 new job openings in the HVAC industry, 14,700 new job openings for computer-controlled machine tool operators, 13,100 new job openings for avionic technicians, 6,100 new job openings for robotics, 4,800 new job openings for marine and motorcycle technicians and 1,900 new job openings for wind turbine service technicians will exist annually for new entrants through 2031 in these fields.
DOL BLS estimates that an average of 39,200 new jobs openings for industrial machinery mechanics, 42,600 new job openings for welders, 37,700 new job openings in the HVAC industry, 14,300 new job openings for computer-controlled machine tool operators, 12,800 new job openings for avionic technicians, 5,700 new job openings for robotics, 4,800 new job openings for marine and motorcycle technicians and 1,800 new job openings for wind turbine service technicians will exist annually for new entrants through 2032 in these fields. 3 Table of Contents Market served by Concorde The market for qualified healthcare support occupations across the programs that Concorde offers is growing even faster, with the U.S.
Our student recruitment efforts begin with our commitment to positive outcomes, both for our students and our industry relationships. We use a multi-touch media approach for our three primary admissions channels (high school, adult, and military) to enroll and start students, which involves national and local outreach to generate a high quality and quantity of prospective students.
Recruitment Our student recruitment efforts begin with our commitment to positive outcomes, both for our students and our industry relationships. We use a multi-touch media approach across our admissions channels.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeBecause we operate in a highly regulated industry, we are subject to compliance reviews and claims of noncompliance by government agencies, regulatory agencies and third parties alleging noncompliance with applicable standards. Each of our institutions’ administration of Title IV Program funds must be audited annually by independent accountants and the resulting audit report must be submitted to ED for review.
Biggest changeEach of our institutions’ administration of Title IV Program funds must be audited annually by independent accountants and the resulting audit report must be submitted to ED for review. Moreover, we may be subject to program reviews from ED or a compliance audit as a condition of participation in the Higher Education Emergency Relief Fund (“HEERF”).
The market price of our common stock has fluctuated significantly in the past, and may continue to fluctuate significantly for a variety of different reasons, including, without limitation, developments in our industry; our quarterly or annual earnings or those of other companies in our industry; changes in earnings estimates or recommendations by research analysts who track our common stock or the stocks of other companies in our industry; negative publicity, 34 including government hearings and other public lawmaker or regulator criticism, regarding our industry or business; changes in enrollment; and changes in general conditions in the United States and global economies or financial markets, including those resulting from health epidemics, war, incidents of terrorism or responses to such events.
The market price of our common stock has fluctuated significantly in the past, and may continue to fluctuate significantly for a variety of different reasons, including, without limitation, developments in our industry; our quarterly or annual earnings or those of other companies in our industry; changes in earnings estimates or recommendations by research analysts who track our common stock or the stocks of other companies in our industry; negative publicity, including government hearings and other public lawmaker or regulator criticism, regarding our industry or business; changes in enrollment; and changes in general conditions in the United States and global economies or financial markets, including those resulting from health epidemics, war, incidents of terrorism or responses to such events.
Any reduction in net income and operating income resulting from the write-down or impairment of goodwill could adversely affect our financial results. If economic or industry conditions deteriorate or if market valuations decline, including with respect to our common stock, we may be required to impair goodwill in future periods.
Any reduction in net income and operating income resulting from the write-down or impairment of goodwill could adversely affect our financial results. If economic or industry 35 conditions deteriorate or if market valuations decline, including with respect to our common stock, we may be required to impair goodwill in future periods.
The regulations and reporting requirements may 24 lengthen the time to obtain necessary state approvals and require us to modify our operations in order to comply with the requirements. This could impose substantial additional costs on our institutions, which could have a material adverse effect on our cash flows, results of operations and financial condition.
The regulations and reporting requirements may lengthen the time to obtain necessary state approvals and require us to modify our operations in order to comply with the requirements. This could impose substantial additional costs on our institutions, which could have a material adverse effect on our cash flows, results of operations and financial condition.
Additionally, an acquired institution may have known or unknown instances of noncompliance with federal, state or accrediting agency requirements, including, but not limited to, noncompliance with requirements included in the defense to repayment regulations that could result in liabilities, sanctions, or material conditions or restrictions that we may inherit by acquiring the institution.
Additionally, an acquired institution may have known or unknown instances of noncompliance with federal, state or accrediting agency requirements, including, but not limited to, noncompliance with requirements included in the borrower defense to repayment regulations that could result in liabilities, sanctions, or material conditions or restrictions that we may inherit by acquiring the institution.
Any interruptions that hinder our ability to timely deliver our services, or that materially impact the efficiency or cost with which we provide these services, or our ability to attract and retain computer programmers with knowledge of the appropriate computer programming language, would adversely affect our reputation and profitability and our ability to conduct business 28 and prepare financial reports.
Any interruptions that hinder our ability to timely deliver our services, or that materially impact the efficiency or cost with which we provide these services, or our ability to attract and retain computer programmers with knowledge of the appropriate computer programming language, would adversely affect our reputation and profitability and our ability to conduct business and prepare financial reports.
We are also subject to various lawsuits, investigations and claims, covering a wide range of matters, including, but not limited to, alleged violations of federal and state laws, including consumer protection laws applicable to activities of postsecondary educational institutions, false claims made to the federal government and routine employment matters.
We are also subject to various lawsuits, investigations and claims, covering a wide range of matters, including, but not limited to, alleged violations 27 of federal and state laws, including consumer protection laws applicable to activities of postsecondary educational institutions, false claims made to the federal government and routine employment matters.
The enactment of one or more of these proposed laws or similar laws could create compliance challenges and impose substantial additional costs on our institutions, which could have a material adverse effect on our academic or operational initiatives, cash flows, results of operations, or financial condition.
The enactment of one or more of these proposed laws or similar laws could create compliance challenges and 28 impose substantial additional costs on our institutions, which could have a material adverse effect on our academic or operational initiatives, cash flows, results of operations, or financial condition.
If we fail to comply with these requirements, we could lose our eligibility to participate in veterans’ benefits programs, which could have a material adverse effect on our operations, cash flows, results of operations, or financial condition.
If we fail to comply with 26 these requirements, we could lose our eligibility to participate in veterans’ benefits programs, which could have a material adverse effect on our operations, cash flows, results of operations, or financial condition.
A future acquisition could result in the incurrence of debt and contingent liabilities, an increase in interest expense, amortization expenses, goodwill and other intangible assets, charges relating to integration costs or an increase in the number of shares outstanding.
A future acquisition could result in the incurrence of debt and contingent liabilities, an increase in interest expenses, amortization expenses, goodwill and other intangible assets, charges relating to integration costs or an increase in the number of shares outstanding.
In addition, our acquisition of a school is a change of ownership of that school, 30 which may result in the temporary suspension of that school’s participation in federal student financial aid programs until it obtains ED’s approval.
In addition, our acquisition of a school is a change of ownership of that school, which may result in the temporary suspension of that school’s participation in federal student financial aid programs until it obtains ED’s approval.
Transactions or events that constitute a change of control include significant acquisitions or dispositions of our common stock or significant changes in the composition of our board of directors. Some of these transactions or events may be beyond our control.
Transactions or events that constitute a change 29 of control include significant acquisitions or dispositions of our common stock or significant changes in the composition of our board of directors. Some of these transactions or events may be beyond our control.
These registration rights could facilitate the resale of such securities into the public market, and any resale of these securities would increase the number of shares of our common stock available for public trading.
These registration rights could facilitate the resale of such securities into the 36 public market, and any resale of these securities would increase the number of shares of our common stock available for public trading.
Even if we are able to develop acceptable new programs, we may not be able to introduce these new programs as quickly as the industries we serve require or as quickly as our competitors.
Even if we are able to develop acceptable 31 new programs, we may not be able to introduce these new programs as quickly as the industries we serve require or as quickly as our competitors.
The approvals granted by these entities permit our schools to operate and to participate in a variety of government-sponsored financial aid programs, including Title IV Programs, from which we derived approximately 67% of our revenues, on a cash basis, in fiscal year 2022.
The approvals granted by these entities permit our schools to operate and to participate in a variety of government-sponsored financial aid programs, including Title IV Programs, from which we derived approximately 67% of our revenues, on a cash basis, in fiscal year 2023.
If we or any of our schools experience a change of control under the standards of applicable federal and state agencies, our accrediting commission or ED, we or the affected schools must seek the approval of the relevant regulatory agencies. These agencies do not have uniform criteria for what constitutes a change of control.
If we or any of our schools experience a change of control under the standards of applicable federal and state agencies, our accrediting commissions or ED, we or the affected schools must seek the approval of the relevant regulatory agencies. These agencies do not have uniform criteria for what constitutes a change of control.
Certain of our existing industry relationships, including those with American Honda Motor Company, Inc.; Mercury Marine, a division of Brunswick Corporation; Volvo Penta of the Americas, Inc. and Yamaha Motor Corporation, USA, are not memorialized in writing and are based on verbal understandings.
Certain of our UTI segment’s existing industry relationships, including those with American Honda Motor Company, Inc.; Mercury Marine, a division of Brunswick Corporation; Volvo Penta of the Americas, Inc. and Yamaha Motor Corporation, USA, are not memorialized in writing and are based on verbal understandings.
Significant negotiated rulemakings that could materially and adversely affect our business are discussed in “Business - Regulatory Environment - Title IV Program Rulemaking.” 22 The loss of funds from Veterans' benefits programs could materially and adversely affect our business.
Significant negotiated rulemakings that could materially and adversely affect our business are discussed in “Business - Regulatory Environment - Title IV Program Rulemakings.” The loss of funds from Veterans' benefits programs could materially and adversely affect our business.
Any action by Congress that significantly reduces funding for Title IV Programs or the ability of our schools or students to receive funding through these programs or places restrictions on the use of funds received by an institution through these programs could have a material adverse effect on our operations, cash flows, results of operations, or financial condition.
Any action by Congress that significantly affects Title IV Programs or the ability of our schools or students to receive funding through these programs or places restrictions on the use of funds received by an institution through these programs could have a material adverse effect on our operations, cash flows, results of operations, or financial condition.
We are heavily dependent on the reliability and performance of an internally developed student management and reporting system, and any difficulties in maintaining this system may result in service interruptions, decreased customer service or increased expenditures. The software that underlies our student management and reporting has been developed primarily by our own employees.
We are heavily dependent on the reliability and performance of an internally developed student management and reporting system, and any difficulties in maintaining this system may result in service interruptions, decreased customer service or increased expenditures. The software that underlies our student management and reporting for our UTI schools has been developed primarily by our own employees.
If we fail to comply with the covenants or payments specified in the Term Loans, the lenders could declare an event of default, which would give it the right to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be immediately due and payable.
If we fail to comply with the covenants or payments specified in the agreements, the lenders could declare an event of default, which would give it the right to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be immediately due and payable.
On June 24, 2016, we entered into a purchase agreement (the “Coliseum Securities Purchase Agreement”) pursuant to which we sold 700,000 shares of Series A Preferred Stock to Coliseum Holdings I, LLC (“ Coliseum Holdings ”), and filed a Certificate of Designation, Preferences and Rights of Series A Convertible Preferred Stock (the “ Certificate of Designations ”) with the Secretary of State of the State of Delaware.
On June 24, 2016, we entered into a purchase agreement pursuant to which we sold 700,000 shares of Series A Preferred Stock to Coliseum Holdings I, LLC (“ Coliseum Holdings ”), and filed a Certificate of Designation, Preferences and Rights of Series A Convertible Preferred Stock with the Secretary of State of the State of Delaware.
While we are committed to strict compliance with all applicable laws, regulations, and accrediting standards, if the results of government, regulatory or third party reviews or proceedings are unfavorable to us, or if we are unable to successfully defend against lawsuits or claims, we may be required to pay monetary damages or be subject to fines, limitations, loss of regulatory approvals or Title IV Program funding or other federal and state funding, injunctions or other penalties.
While we are committed to strict compliance with all applicable laws, regulations, and accrediting standards, if the results of government, regulatory or third party reviews or proceedings are unfavorable to us, or if we are unable to successfully defend against lawsuits or claims, we may be required to pay monetary damages, be held liable for a student’s discharged debt, or be subject to fines, limitations, loss of regulatory approvals or Title IV Program funding or other federal and state funding, injunctions or other penalties.
The proprietary loan program enables students who have utilized all available government-sponsored or other financial aid and have not been successful in obtaining private loans from other financial institutions, for independent students, or PLUS loans, for dependent students, to borrow a portion of their tuition if they meet certain criteria.
The proprietary loan program offered by the UTI and MMI brand schools enables students who have utilized all available government-sponsored or other financial aid and have not been successful in obtaining private loans from other financial institutions, for independent students, or PLUS loans, for dependent students, to borrow a portion of their tuition if they meet certain criteria.
Such costs and expenses could have a material adverse effect on our business, cash flows, results of operations and financial condition. An adverse outcome in any of these matters could also materially and adversely affect our licenses, accreditation and eligibility to participate in Title IV Programs.
Such costs and expenses could have a material adverse effect on our business, cash flows, results of operations and financial condition and could also result in negative publicity that could negatively affect student enrollment. An adverse outcome in any of these matters could also materially and adversely affect our licenses, accreditation and eligibility to participate in Title IV Programs.
On a fully converted basis, the shares of Series A Preferred Stock are convertible into 20,296,847 shares of common stock.
If fully converted, the shares of Series A Preferred Stock are convertible into 20,296,847 shares of common stock.
The extent to which COVID-19, like any other rapidly spreading contagious illness, may impact our business and operations will depend on a variety of factors beyond our control, including the actions of governments, businesses and other enterprises in response to the COVID-19 pandemic, the effectiveness of those actions, and vaccine availability, distribution and adoption, all of which cannot be predicted with any level of certainty.
The extent to which a similar pandemic may impact our business and operations will depend on a variety of factors beyond our control, including the actions of governments, businesses and other enterprises in response to the pandemic, the effectiveness of those actions, and vaccine availability, distribution and adoption, all of which cannot be predicted with any level of certainty.
We also lease three campus locations in California and four campus locations in Texas, all in areas that have historically been susceptible to severe weather events.
We also have seven campus locations in California and seven campus locations in Texas, all in areas that have historically been susceptible to severe weather events.
Factors that may impact our ability to collect these loans include the following, without limitation: current economic conditions; compliance with laws applicable to the origination, servicing and collection of loans; the quality of our loan servicers’ performance; and a decline in graduate employment opportunities and the priority that the borrowers under this loan program attach to repaying these loans as compared to other obligations, particularly students who did not complete or were dissatisfied with their programs of study.
Item 8 of this Annual Report on Form 10-K for further discussion of activity under the proprietary loan program. 34 Factors that may impact our ability to collect these loans include the following, without limitation: current economic conditions; compliance with laws applicable to the origination, servicing and collection of loans; the quality of our loan servicers’ performance; and a decline in graduate employment opportunities and the priority that the borrowers under this loan program attach to repaying these loans as compared to other obligations, particularly students who did not complete or were dissatisfied with their programs of study.
Factors that could impact our ability to increase such awareness include: continued school district limitations on access to students by for-profit institutions; actions that would limit our access to military bases and installations; and our failure to maintain relationships with automotive, diesel, collision repair, motorcycle and marine manufacturers and suppliers.
Factors that could impact our ability to increase such awareness include: continued school district limitations on access to students by for-profit institutions; actions that would limit our access to military bases and installations; and our failure to maintain relationships with automotive, diesel, collision repair, motorcycle and marine manufacturers and suppliers, as well as hospitals, long-term care facilities and medical and dental offices.
Because all Title IV Program student loans (other than Perkins loans) are now processed under the Direct Loan (“DL”) program, any disruption in our ability to process student loans through the DL program, either because of administrative challenges on our part or the inability of ED to process the increased volume of loans through the DL program on a timely basis, could impact our students’ ability to timely obtain their student loans and have a material adverse effect on our operations, cash flows, results of operations, or financial condition. 23 Government and regulatory agencies and third parties may conduct compliance reviews, bring claims or initiate litigation against us.
Because all Title IV Program student loans (other than Perkins loans) are now processed under the Direct Loan (“DL”) program, any disruption in our ability to process student loans through the DL program, either because of administrative challenges on our part or the inability of ED to process the increased volume of loans through the DL program on a timely basis, could impact our students’ ability to timely obtain their student loans and have a material adverse effect on our operations, cash flows, results of operations, or financial condition.
These skills are becoming more sophisticated in line with technological advancements in the automotive, diesel, collision repair, motorcycle and marine industries. Accordingly, educational programs at our schools must keep pace with those technological advancements. Additionally, the method used to deliver curriculum has evolved to include online delivery.
These skills are becoming more sophisticated in line with technological advancements in the transportation, skilled trades, energy and healthcare industries Accordingly, educational programs at our schools must keep pace with those technological advancements. Additionally, the method used to deliver curriculum has evolved to include online delivery.
There is a 90-day termination clause in the contract under which they provide these services. If this company were to terminate the contract, we could experience an interruption in loan application processing or loan servicing, which could result in a decrease in our student populations. We have goodwill, which may become impaired and subject to a write-down.
If this company were to terminate the contract, we could experience an interruption in loan application processing or loan servicing, which could result in a decrease in our student populations. We have goodwill, which may become impaired and subject to a write-down.
These fluctuations may result in volatility or have an adverse effect on the market price of our common stock. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
These fluctuations may result in volatility or have an adverse effect on the market price of our common stock.
Establishing new schools or campuses poses unique challenges and requires us to make investments in management and capital expenditures, incur marketing expenses and devote other resources that are different, and in some cases greater, than those required with respect to the operation of acquired schools. Accordingly, when we open new schools, initial investments could reduce our profitability.
As part of our business strategy, we anticipate opening and operating new schools or campuses. Establishing new schools or campuses poses unique challenges and requires us to make investments in management and capital expenditures, incur marketing expenses and devote other resources that are different, and in some cases greater, than those required with respect to the operation of acquired schools.
Such sanctions or limitations, including the loss of Title IV Program eligibility by any of our current or future institutions, could have a material adverse effect on our academic or operational initiatives, cash flows, results of operations, or financial condition.
Such sanctions or limitations, including the loss of Title IV Program eligibility by any of our current or future institutions, could have a material adverse effect on our academic or operational initiatives, cash flows, results of operations, or financial condition. Failure to maintain state authorizations or institutional accreditation could also preclude participation in Title IV Programs.
However, increases in interest rates with respect to any amount of our debt not covered by the interest rate swaps could increase the cost of servicing our debt and could reduce our profitability and cash flows.
However, increases in interest rates with respect to any amount of our debt not covered by the interest rate swaps could increase the cost of servicing our debt and could reduce our profitability and cash flows. Such increases may occur from changes in regulatory standards or industry practices.
These events could adversely affect the ability or willingness of our former students to repay student loans, which could increase our student loan cohort default rate and require increased time, attention and resources to manage these defaults. Competition could decrease our market share and create tuition pricing concerns. The postsecondary education market is highly competitive.
These events could adversely affect the ability or willingness of our former students to repay student loans, which could increase our student loan cohort default rate and require increased time, attention and resources to manage these defaults.
If we are not able to effectively and efficiently integrate curricula, this could have a material adverse effect on our cash flows, results of operations and financial condition. Expanding our blended learning format could be difficult for us. The expansion of existing and creation of new blended programs may not be accepted by students or employers.
Our inability to continue to develop awareness of our programs could reduce our enrollments, which could have a material adverse effect on our cash flows, results of operations and financial condition. Expanding our blended learning format could be difficult for us. The expansion of existing and creation of new blended programs may not be accepted by students or employers.
We may limit tuition increases or increase spending in response to competition in order to retain or attract students or pursue new market opportunities; however, if we cannot effectively respond to competitor changes, it could reduce our enrollments and our student populations.
Additionally, the military often recruits or retains potential students when branches of the military offer enlistment or re-enlistment bonuses. 32 We may limit tuition increases or increase spending in response to competition in order to retain or attract students or pursue new market opportunities; however, if we cannot effectively respond to competitor changes, it could reduce our enrollments and our student populations.
We teach our UTI and MMI programs at leased campus locations in Orlando, Florida, and have signed a lease for a new campus in Miramar, Florida, both areas that can experience tropical storms and hurricanes, severe storms, floods, coastal storms, tornadoes and power outages.
We teach our UTI, MMI and Concorde programs at campus locations in Jacksonville, Orlando, Miramar, and Tampa, Florida, all areas that can experience tropical storms and hurricanes, severe storms, floods, coastal storms, tornadoes and power outages.
We have extensive industry relationships that we believe afford us significant competitive strength and support our market leadership. These relationships enable us to support enrollment in our core programs by attracting students through brand name recognition and the associated prospect of high-quality employment opportunities.
These relationships enable us to support enrollment in our core programs by attracting students through brand name recognition and the associated prospect of high-quality employment opportunities.
Sustained or repeated system failures or security breaches that interrupt our ability to process information in a timely manner or that result in a breach of proprietary or personal information could have a material adverse effect on our operations and our reputation.
A violation of any laws or regulations relating to the collection, retention or use of personal information could also result in the imposition of fines or lawsuits against us. 33 Sustained or repeated system failures or security breaches that interrupt our ability to process information in a timely manner or that result in a breach of proprietary or personal information could have a material adverse effect on our operations and our reputation.
Continued or increased Congressional activity could result in the enactment of more stringent legislation, further rulemakings affecting participation in Title IV Programs and other governmental actions, increasing regulation of the for-profit sector. The likelihood of such activity could be increased as a result of elections and appointments.
Continued or increased Congressional activity could result in the enactment of more stringent legislation, further rulemakings affecting participation in Title IV Programs and other governmental actions, increasing regulation of the for-profit sector. In addition, concerns generated by this activity may adversely affect enrollment in for-profit educational institutions such as ours.
These regulations also are frequently challenged through litigation, creating significant uncertainty as to when and what part of the regulations have taken effect, how they should be implemented, and how they will be interpreted and enforced.
These regulations also are frequently challenged through litigation, creating significant uncertainty as to when and what part of the regulations have taken effect, how they should be implemented, and how they will be interpreted and enforced. New Borrower Defense to Repayment or Gainful Employment regulations, in particular, may increase risks of financial liability or reputational harm.
During periods when the unemployment rate declines or remains stable, prospective students have more employment options and recruiting new students has traditionally been more challenging. In addition, affordability concerns associated with increased living expenses, relocation expenses and the availability of full- and part-time jobs for students attending classes have made it more challenging for us to attract and retain students.
In addition, affordability concerns associated with increased living expenses, relocation expenses and the availability of full- and part-time jobs for students attending classes have made it more challenging for us to attract and retain students.
Any such denial or material limitation could have a material adverse effect on our operations, cash flows, results of operations, or financial condition. 25 If regulators do not approve or delay their approval of transactions involving a change of control of our company or any of our schools, our ability to participate in Title IV Programs may be impaired.
If regulators do not approve or delay their approval of transactions involving a change of control of our company or any of our schools, our ability to participate in Title IV Programs may be impaired.
We cannot be sure that we will be able to identify suitable expansion opportunities to maintain or accelerate our current growth rate or that we will be able to successfully integrate or profitably operate any new schools or campuses.
Additionally, to be eligible for Title IV Program funding, a new school or campus would have to be certified by ED. We cannot be sure that we will be able to identify suitable expansion opportunities to maintain or accelerate our current growth rate or that we will be able to successfully integrate or profitably operate any new schools or campuses.
To open a new school or campus, we would be required to obtain appropriate state and accrediting commission approvals, which may be conditioned or delayed in a manner that could significantly affect our growth plans. Additionally, to be eligible for Title IV Program funding, a new school or campus would have to be certified by ED.
Accordingly, when we open new schools, initial investments could reduce our profitability. To open a new school or campus, we would be required to obtain appropriate state and accrediting commission approvals, which may be conditioned or delayed in a manner that could significantly affect our growth plans.
A state chartered bank with a small market capitalization originates loans under the proprietary loan program. If the bank no longer provides service under the contract, we do not currently have an alternative bank to fulfill the demand. There are a limited number of banks that are willing to participate in a program such as the proprietary loan program.
A state chartered bank with a small market capitalization originates loans under the proprietary loan program for the UTI and MMI brand schools. If the bank no longer provides service under the contract, we do not currently have an alternative bank to fulfill the demand.
We have entered into interest rate swap agreements with the lenders that effectively fix the interest rates on 50% of the principal amount of the loan at 3.5% for the Avondale Loan and at 4.69% for the Lisle Loan.
For our term loans, we entered into interest rate swap agreements with the lenders at the time of inception that effectively fix the interest rates on 50% of the principal amount of the loan.
If we are unable to improve our underutilized capacity, we may experience operating inefficiencies at a level that would result in higher than anticipated costs, which would adversely affect our profitability and operating margins. Our success depends, in part, on the effectiveness of our marketing and advertising programs in recruiting new students.
If we are unable to improve our underutilized capacity, we may experience operating inefficiencies at a level that would result in higher than anticipated costs, which would adversely affect our profitability and operating margins. Macroeconomic conditions and aversion to debt could adversely affect our business.
Both the Avondale Loan and the Lisle Loan (collectively the “Term Loans”) impose various restrictions and contain customary affirmative and restrictive covenants, including, without limitation, certain reporting obligations and certain limitations on restricted payments; and limitations on liens, encumbrances and indebtedness.
Our term loans and revolving credit facility impose various restrictions and contain customary affirmative and restrictive covenants, including, without limitation, certain reporting obligations and certain limitations on restricted payments; and limitations on liens, encumbrances and indebtedness.
Possession and use of personal information in our operations also subjects us to legislative and regulatory burdens that could restrict our use of personal information and require notification of data breaches. A violation of any laws or regulations relating to the collection, retention or use of personal information could also result in the imposition of fines or lawsuits against us.
Possession and use of personal information in our operations also subjects us to legislative and regulatory burdens that could restrict our use of personal information and require notification of data breaches.
These results could have a material adverse effect on our cash flows, results of operations and financial condition or result in dilution to current stockholders.
These results could have a material adverse effect on our cash flows, results of operations and financial condition or result in dilution to current stockholders. 30 If we fail to reduce our underutilized capacity, we may experience a deterioration of our profitability and operating margins. We have underutilized capacity at a number of our campuses.
You should consider carefully the risks and uncertainties described below in addition to other information contained in this Annual Report on Form 10-K, including our consolidated financial statements and related notes.
You should consider carefully the risks and uncertainties described below in addition to other information contained in this Annual Report on Form 10-K, including our consolidated financial statements and related notes. 25 Risks Related to the Extensive Regulation of Our Business Our failure to comply with the extensive regulatory requirements for school operations could result in financial requirements or penalties, restrictions on our operations and loss of external financial aid funding.
However, ED, or state education agencies, and our accreditor could decline to approve a new program, or impose material conditions or restrictions on us.
However, ED, or state education agencies, and our accreditors could decline to approve a new program or impose material conditions or restrictions on us. Any such denial or material limitation could have a material adverse effect on our operations, cash flows, results of operations, or financial condition.
Continued or increased examination of the for-profit education sector could result in further legislation, appropriations, regulations, and enforcement actions that could materially and adversely affect our business. Over the last decade, Congress has focused significantly on for-profit education institutions, specifically regarding participation in Title IV Programs and DOD oversight of tuition assistance for military service members attending for-profit colleges.
Over the last decade, Congress and state legislatures have focused significantly on for-profit education institutions, specifically regarding participation in Title IV Programs and DOD oversight of tuition assistance for military service members attending for-profit colleges.
Although we maintain insurance in respect of these types of events, available insurance proceeds may not be adequate to compensate us for damages sustained due to these events. We may not be able to retain our key personnel or hire and retain the personnel we need to sustain and grow our business.
Although we maintain insurance in respect of these types of events, available insurance proceeds may not be adequate to compensate us for damages sustained due to these events. Our success depends, in part, on the effectiveness of our marketing and advertising programs in recruiting new students.
The time it could take us to replace the bank could result in an interruption in the loan origination process, which could result in a decrease in our student populations. Furthermore, a single company processes loan applications and services the loans under the proprietary loan program.
There are a limited number of banks that are willing to participate in a program such as the proprietary loan program. The time it could take us to replace the bank could result in an interruption in the loan origination process, which could result in a decrease in our student populations.
Any conversion of Series A Preferred Stock into common stock would dilute the ownership interest of existing holders of our common stock, and any sales in the public market of the common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock.
See Note 18 of the notes to our Consolidated Financial Statements within Part II, Item 8 of this Annual Report on Form 10-K for a discussion of the “Continuing Caps.” Any conversion of Series A Preferred Stock into common stock would dilute the ownership interest of existing holders of our common stock, and any sales in the public market of the common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock.
Additionally, many of the software systems we currently use will need to be enhanced over time or replaced with equivalent commercial products, either of which could entail considerable effort and expense. System disruptions and security threats to our computer networks, including breach of the personal information we collect, could have a material adverse effect on our business and our reputation.
System disruptions and security threats to our computer networks, including breach of the personal information we collect, could have a material adverse effect on our business and our reputation.
An increase in interest rates would increase the cost of servicing our debt and could reduce our profitability. A portion of our Term Loans bear interest at variable rates.
If we are unable to hire, develop or retain quality admissions representatives, the effectiveness of our student recruiting efforts would be adversely affected. An increase in interest rates would increase the cost of servicing our debt and could reduce our profitability. Our revolving credit facility and a portion of our term loans bear interest at variable rates.
We compete with local community colleges for students seeking programs that are similar to ours, mainly due to local accessibility, low tuition rates and in certain cases free tuition. Most public institutions are able to charge lower tuition than our schools, due in part to government subsidies and other financial sources not available to for-profit schools.
Some traditional public and private colleges, universities and community colleges, as well as other private career-oriented schools, offer programs that may be perceived by students to be similar to ours. We compete with local community colleges for students seeking programs that are similar to ours, mainly due to local accessibility, low tuition rates and in certain cases free tuition.
Prospective students may choose to forego additional education and enter the workforce directly, especially during periods when the unemployment rate declines or remains stable as it has in recent years. This may include employment with our industry partners or with other manufacturers and employers of our graduates.
Most public institutions are able to charge lower tuition than our schools, due in part to government subsidies and other financial sources not available to for-profit schools. Prospective students may choose to forego additional education and enter the workforce directly, especially during periods when the unemployment rate declines or remains stable as it has in recent years.
Moreover, damage to or total 26 destruction of our campus facilities from various weather events may not be covered in whole or in part by any insurance we may have. Macroeconomic conditions and aversion to debt could adversely affect our business. We believe that our enrollment, which tends to be counter cyclical, is affected by changes in economic conditions.
Moreover, damage to or total destruction of our campus facilities from various weather events may not be covered in whole or in part by any insurance we may have. Public health pandemics, epidemics or outbreaks, including the COVID-19 pandemic, could have a material adverse effect on our business and operations.
We continue to experience a high level of competition for higher quality students not only from similar programs, but also from the overall employment market and the military. Some traditional public and private colleges and universities and community colleges, as well as other private career-oriented schools, offer programs that may be perceived by students to be similar to ours.
Competition could decrease our market share and create tuition pricing concerns. The postsecondary education market is highly competitive. We continue to experience a high level of competition for higher quality students not only from similar programs, but also from the overall employment market and the military.
See Note 2 of the notes to our Consolidated Financial 31 Statements within Part II. Item 8 of this Annual Report on Form 10-K for further discussion of activity under the proprietary loan program.
See Note 2 of the notes to our Consolidated Financial Statements within Part II.
If our institutions fail to comply with any of these regulatory requirements, our regulators could take an array of actions, including, without limitation, revocation of the approval granted by the agency. Any such adverse action could adversely affect our cash flows, results of operations and financial condition, and could include the imposition of significant operating restrictions upon us.
Any such adverse action could adversely affect our cash flows, results of operations and financial condition, and could include the imposition of significant operating restrictions upon us. It could also result in negative publicity that could negatively affect student enrollment.
The remaining $8.2 million relates to our MMI Orlando, Florida campus and resulted from the acquisition of our motorcycle and marine education business in 1998. We perform our annual goodwill impairment assessment as of August 1 of each fiscal year. Future assessments of goodwill could result in reductions.
Any resulting impairment charge is recognized as an expense in the period in which impairment is identified. Our total recorded goodwill was $28.5 million as of September 30, 2023 resulted from our MMI, MIAT and Concorde acquisitions. We perform our annual goodwill impairment assessment as of August 1 of each fiscal year. Future assessments of goodwill could result in reductions.
Risks Related to Our Business Public health pandemics, epidemics or outbreaks, including the COVID-19 pandemic, could have a material adverse effect on our business and operations. The COVID-19 pandemic and the resulting containment measures have caused economic and financial disruptions globally.
The COVID-19 pandemic and the resulting containment measures have caused economic and financial disruptions globally.
Our inability to continue to develop awareness of our programs could reduce our enrollments, which could have a material adverse effect on our cash flows, results of operations and financial condition. 27 Failure on our part to maintain and expand existing industry relationships and develop new industry relationships with our industry customers could impair our ability to attract and retain students.
Failure on our part to maintain and expand existing industry relationships and develop new industry relationships with our industry customers could impair our ability to attract and retain students. We have extensive industry relationships that we believe afford us significant competitive strength and support our market leadership.
Removed
Risks Related to the Extensive Regulation of Our Business Our failure to comply with the extensive regulatory requirements for school operations could result in financial requirements or penalties, restrictions on our operations and loss of external financial aid funding.
Added
If our institutions fail to comply with any of these regulatory requirements, our regulators could take an array of actions, including, without limitation, issuing fines or penalties, requiring reimbursement for discharged loan obligations, requiring a letter of credit, halting certain business practices, or suspending or terminating our eligibility to participate the Title IV Programs.
Removed
Congress most recently reauthorized the HEA in 2008. It is actively working on another HEA reauthorization, but it is uncertain whether and when the process will be completed.
Added
Certain actions or reviews may also be triggered automatically based on ED’s standards.
Removed
The composition of federal and state executive offices, executive agencies, and legislatures are subject to change based on the results of periodic elections, appointments, and other events.
Added
Congress most recently reauthorized the HEA in 2008. Despite repeated attempts, Congress has not completed a full reauthorization since then. In addition to HEA reauthorization, policies directly related to Title IV Programs and funding for those programs may be impacted by the annual budget and appropriations process as well as by other legislation.
Removed
In some cases, candidates for elected positions in federal or state executive or legislative offices or for appointments to positions in federal or state agencies have negative opinions on for-profit education providers or may support initiatives such as eliminating or reducing student aid eligibility for for-profit education providers or providing funding to free or reduced tuition programs at public and other nonprofit postsecondary education institutions, which could adversely impact our ability to compete with such institutions.
Added
Additionally, a shutdown of government agencies, such as ED, responsible for administering student financial aid programs under Title IV could lead to delays in student eligibility determinations and delays in origination and disbursement of government-funded student loans to our students.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeLocation Brand Approximate Square Footage Leased or Owned Lease Expiration Date Campus locations: Arizona (Avondale) (1) UTI/MMI 283,000 Owned N/A Arizona (Phoenix) (1) MMI 33,000 Leased December 2022 California (Long Beach) UTI 137,000 Leased August 2030 California (Rancho Cucamonga) UTI 148,000 Leased September 2031 California (Sacramento) UTI 117,000 Leased February 2033 Florida (Miramar) UTI 103,000 Leased March 2032 Florida (Orlando) (2) UTI/MMI 188,000 Leased August 2029 and April 2031 Illinois (Lisle) UTI 187,000 Owned N/A Michigan (Canton) MIAT 125,000 Leased April 2036 New Jersey (Bloomfield) UTI 102,000 Leased December 2030 North Carolina (Mooresville) NASCAR Tech 146,000 Leased October 2030 Pennsylvania (Exton) UTI 129,000 Leased October 2029 Texas (Dallas/Ft.
Biggest changeLocation Brand Approximate Square Footage Leased or Owned Lease Expiration Date Campus locations: Arizona (Avondale) UTI/MMI 283,000 Owned N/A California (Garden Grove) Concorde 45,000 Leased March 2032 California (Long Beach) UTI 137,000 Leased August 2030 California (North Hollywood) Concorde 35,000 Leased May 2027 California (Rancho Cucamonga) UTI 148,000 Leased September 2031 California (Sacramento) UTI 117,000 Leased February 2033 California (San Bernardino) Concorde 48,000 Leased March 2028 California (San Diego) Concorde 34,000 Leased January 2027 Colorado (Aurora) Concorde 55,000 Leased December 2025 Florida (Jacksonville) Concorde 46,000 Leased December 2027 Florida (Miramar) UTI 103,000 Leased March 2032 Florida (Miramar) Concorde 33,000 Leased April 2028 Florida (Orlando) (1) UTI/MMI 154,000 Owned N/A Florida (Orlando) (1) UTI/MMI 34,000 Leased March 2031 Florida (Orlando) Concorde 41,000 Leased April 2030 Florida (Tampa) Concorde 30,000 Leased January 2027 Illinois (Lisle) UTI 187,000 Owned N/A Michigan (Canton) MIAT 125,000 Leased April 2036 Mississippi (Southaven) Concorde 23,000 Leased March 2027 Missouri (Kansas City) Concorde 40,000 Leased June 2032 Missouri (St.
ITEM 2. PROPERTIES Campuses and Other Properties The following sets forth certain information relating to our campuses and corporate headquarters as of September 30, 2022. Many of the leases are renewable for additional terms at our option.
ITEM 2. PROPERTIES The following sets forth certain information relating to our campuses and corporate headquarters as of September 30, 2023. Many of the leases are renewable for additional terms at our option.
Worth) UTI 95,000 Owned N/A 35 Location Brand Approximate Square Footage Leased or Owned Lease Expiration Date Texas (Houston) UTI 172,000 Owned N/A Texas (Houston) MIAT 54,000 Leased June 2029 Texas (Austin) UTI 107,000 Leased October 2032 Other locations: Arizona (Phoenix) (3) Corporate Headquarters 21,000 Leased February 2027 (1) During fiscal 2021, we purchased our Avondale, Arizona campus for approximately $45.2 million, including closing costs and other fees.
Worth) UTI 95,000 Owned N/A Texas (Houston) UTI 172,000 Owned N/A Texas (Houston) MIAT 54,000 Leased June 2029 Texas (Grand Prairie) Concorde 50,000 Leased January 2029 Texas (San Antonio) Concorde 48,000 Leased February 2025 Other locations: Arizona (Phoenix) UTI and Corporate 21,000 Leased February 2027 Missouri (Kansas City) (2) Concorde 23,000 Leased May 2027 Missouri (Overland Park) (2) Concorde 8,000 Leased November 2030 38 (1) In March 2023, we purchased the three primary buildings and the associated land at our UTI Orlando, Florida campus, which was previously leased, for approximately $26.2 million, including closing costs and other fees.
Removed
During fiscal 2022, we completed the consolidation of our MMI Phoenix, Arizona campus into the Avondale, Arizona location which resulted in a reduction of approximately 164,000 leased square feet. The square footage noted for MMI Phoenix represents the remaining unoccupied space as of September 30, 2022 under the lease obligation that expires as of December 31, 2022.
Added
Joseph) Concorde 50,000 Leased June 2036 New Jersey (Bloomfield) UTI 102,000 Leased December 2030 North Carolina (Mooresville) NASCAR Tech 146,000 Leased October 2030 Oregon (Portland) Concorde 33,000 Leased July 2034 Pennsylvania (Exton) UTI 129,000 Leased October 2029 Tennessee (Memphis) Concorde 72,000 Leased August 2031 Texas (Austin) UTI 107,000 Leased October 2032 Texas (Dallas) Concorde 47,000 Leased March 2031 Texas (Dallas/Ft.
Removed
(2) During fiscal 2022, we completed the consolidation of our Orlando, Florida campus into one site with 188,000 square feet. The net square footage reduction as a result of the campus optimization plan was approximately 75,000 square feet.
Added
There is one remaining building that is still leased through March 2031. (2) In June 2023, we executed a lease for a new, smaller corporate headquarters for our Concorde segment in Overland Park, Missouri. In July, we vacated our previous office location in Kansas City, Missouri.
Removed
(3) In September 2022, we executed an amendment for our Corporate Headquarters lease which reduced the leased square footage by approximately 8,000 square feet and extended the lease term to February 2027.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe ultimate outcome of pending legal proceedings to which we are a party may have a material adverse effect on our business, cash flows, results of operations or financial condition. ITEM 4. MINE SAFETY DISCLOSURES None. 36 PART II
Biggest changeThe ultimate outcome of pending legal proceedings to which we are a party may have a material adverse effect on our business, cash flows, results of operations or financial condition. ITEM 4. MINE SAFETY DISCLOSURES None. 39 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe graph plots the value of the initial $100 investment at one-year intervals for the fiscal years shown. 37 CRSP Total Returns Index for: 09/2017 09/2018 09/2019 09/2020 09/2021 09/2022 Universal Technical Institute, Inc. $ 100.00 $ 76.66 $ 156.77 $ 146.40 $ 194.81 156.77 Russell 2000 100.00 115.24 104.99 105.40 155.66 119.08 New Peer Group 100.00 142.03 128.43 96.82 96.49 83.01 Companies in the Self-Determined Peer Group: Adtalem Global Education, Inc.
Biggest changeThe graph plots the value of the initial $100 investment at one-year intervals for the fiscal years shown. 40 CRSP Total Returns Index for: 09/2018 09/2019 09/2020 09/2021 09/2022 09/2023 Universal Technical Institute, Inc. $ 100.00 $ 204.51 $ 190.98 $ 254.14 $ 204.51 $ 315.00 Russell 2000 100.00 91.11 91.47 135.08 103.34 112.56 Peer Group 100.00 90.66 66.46 67.91 59.91 76.44 Companies in the Self-Determined Peer Group: Adtalem Global Education, Inc.
This new share repurchase plan replaced the previously authorized plan from fiscal 2012. Any repurchases under this new stock repurchase program require the approval of a majority of the voting power of our Series A Preferred Stock. We did not repurchase any shares during the year ended September 30, 2022.
This new share repurchase plan replaced the previously authorized plan from fiscal 2012. Any repurchases under this new stock repurchase program require the approval of a majority of the voting power of our Series A Preferred Stock. We did not repurchase any shares during the year ended September 30, 2023.
This presentation assumes that $100 was invested in shares of the relevant issuers on September 30, 2017, and that dividends received were immediately invested in additional shares.
This presentation assumes that $100 was invested in shares of the relevant issuers on September 30, 2018, and that dividends received were immediately invested in additional shares.
Notes: • The lines represent monthly index levels derived from compounded daily returns that include all dividends. • The indexes are reweighted daily, using the market capitalization on the previous trading day. • If the monthly interval, based on the fiscal year-end, is not a trading day, the preceding trading day is used. • The index level for all series was set to $100 on September 30, 2017. • Russell 2000 Index Data: Copyright Russell Investments.
Lincoln Educational Services Corporation Notes: • The lines represent monthly index levels derived from compounded daily returns that include all dividends. • The indexes are reweighted daily, using the market capitalization on the previous trading day. • If the monthly interval, based on the fiscal year-end, is not a trading day, the preceding trading day is used. • The index level for all series was set to $100 on September 30, 2018. • Russell 2000 Index Data: Copyright Russell Investments.
As of December 5, 2022, there were 22 holders of record of our common stock. Dividends On June 9, 2016, our board of directors voted to eliminate the quarterly cash dividend on our common stock. Any future common stock dividends require the approval of a majority of the voting power of the Series A Preferred Stock.
As of November 28, 2023, there were 14 holders of record of our common stock. Dividends On June 9, 2016, our board of directors voted to eliminate the quarterly cash dividend on our common stock. Any future common stock dividends require the approval of a majority of the voting power of the Series A Preferred Stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is listed on the NYSE under the symbol “UTI.” The closing price of our common stock as reported by the NYSE on December 5, 2022 was $7.30 per share.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is listed on the NYSE under the symbol “UTI.” The closing price of our common stock as reported by the NYSE on November 28, 2023 was $11.62 per share.
Lincoln Educational Services Corporation American Public Education, Inc. Perdoceo Education Corporation Aspen Group, Inc. Strategic Education, Inc.
Perdoceo Education Corporation American Public Education, Inc. Strategic Education, Inc.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following table sets forth the significant components of our selling, general and administrative expenses (in thousands): Year Ended September 30, 2022 2021 Salaries expense $ 63,319 $ 56,644 Employee benefits and tax 11,734 10,965 Bonus expense 14,329 14,671 Stock-based compensation 4,172 1,748 Compensation and related costs 93,554 84,028 Advertising expense 51,546 38,748 Other selling, general and administrative expenses 26,314 18,828 Contract services expense 5,815 5,509 Professional services expense 8,755 5,409 Intangible asset impairment expense 2,000 — Depreciation and amortization expense 1,174 796 Total selling, general and administrative expenses $ 189,158 $ 153,318 Compensation and related costs increased by $9.5 million for the year ended September 30, 2022 as compared to the prior year, primarily due to an increase in headcount to support our growth and diversification initiatives, along with an increase in stock-based compensation expense reflecting the cumulative impact of annual grants being resumed in 2020 and adjustments related to the performance conditions in the prior year.
Biggest changeThe following table sets forth the significant components of our selling, general and administrative expenses (in thousands): Year ended September 30, 2023 UTI Concorde Corporate Consolidated Salaries, employee benefits and tax expense $ 67,485 $ 21,401 $ 18,869 $ 107,755 Bonus expense 11,257 2,594 5,141 18,992 Stock-based compensation 877 — 2,779 3,656 Compensation and related costs 79,619 23,995 26,789 130,403 Advertising and marketing expense 52,809 19,358 — 72,167 Professional and contract services expense 8,093 608 9,110 17,811 Intangible asset impairment expense — — — — Other selling, general and administrative expenses 16,546 10,298 8,914 35,758 Total selling, general and administrative expenses $ 157,067 $ 54,259 $ 44,813 $ 256,139 Year ended September 30, 2022 UTI Concorde Corporate Consolidated Salaries, employee benefits and tax expense $ 56,521 $ — $ 18,532 $ 75,053 Bonus expense 10,685 — 3,644 14,329 Stock-based compensation 648 — 3,524 4,172 Compensation and related costs 67,854 — 25,700 93,554 Advertising and marketing expense 54,501 — — 54,501 Professional and contract services expense 4,412 — 10,157 14,569 Intangible asset impairment expense 2,000 — — 2,000 Other selling, general and administrative expenses 18,393 — 6,141 24,534 Total selling, general and administrative expenses $ 147,160 $ — $ 41,998 $ 189,158 UTI Compensation and related costs increased by $11.8 million for the year ended September 30, 2023 as compared to the prior year, primarily due to an increase in headcount to support our growth, diversification and optimization initiatives.
Student Enrollment and Tuition Average full-time enrollments vary depending on, among other factors, the number of continuing students at the beginning of a period, new student enrollments during the period, students who have previously withdrawn but decide to re-enroll during the period, graduations and withdrawals during the period.
Student Enrollment and Tuition Average full-time enrollments vary depending on, among other factors, the number of continuing students at the beginning of a period, new student enrollments during the period, students who have previously withdrawn but decide to re-enroll during the period, and graduations and withdrawals during the period.
Our average full-time enrollments are influenced by the: • Attractiveness of our program offerings to high school graduates and potential adult students; • Effectiveness of our marketing efforts; • Depth of our industry relationships; • Strength of employment markets and long-term career prospects; • Quality of our instructors and student services professionals; • Persistence of our students; the length of our education programs; • Availability of federal and alternative funding for our programs; and • Number of graduates of our programs who elect to attend the advanced training programs we offer and general economic conditions.
Our average full-time enrollments are influenced by the: • Attractiveness of our program offerings to high school graduates and potential adult students; • Effectiveness of our marketing efforts; • Depth of our industry relationships; • Strength of employment markets and long-term career prospects; • Quality of our instructors and student services professionals; • Persistence of our students; • Length of our education programs; • Availability of federal and alternative funding for our programs; and • Number of graduates of our programs who elect to attend the advanced training programs we offer and general economic conditions.
Under the terms of the proprietary loan program, the bank originates loans for our students who meet specific credit criteria with the related proceeds used exclusively to fund a portion of their tuition. We then purchase all such loans from the bank at least monthly and assume all of the related credit risk.
Under the terms of the proprietary loan program, the bank originates loans for our students who meet specific criteria with the related proceeds used exclusively to fund a portion of their tuition. We then purchase all such loans from the bank at least monthly and assume all of the related credit risk.
If any of our institutions were to lose its eligibility to participate in federal student financial aid or veterans' benefit programs, the students at that institution, and other locations of that institution, would lose access to funds derived from those programs 39 and would have to seek alternative sources of funds to pay their tuition and fees.
If any of our institutions were to lose its eligibility to participate in federal student financial aid or veterans' benefit programs, the students at that institution, and other locations of that institution, would lose access to funds derived from those programs and would have to seek alternative sources of funds to pay their tuition and fees.
Since the items excluded from this measure are 45 significant components in understanding and assessing financial performance under GAAP, this measure should not be considered to be an alternative to net income (loss) or any other measures derived in accordance with GAAP as a measure of our operating performance or profitability.
Since the items excluded from this measure are significant components in understanding and assessing financial performance under GAAP, this measure should not be considered to be an alternative to net income (loss) or any other measures derived in accordance with GAAP as a measure of our operating performance or profitability.
In assessing the need for a valuation allowance, we 52 consider all available evidence, including our historical profitability and projections of future taxable income. If, based on the weight of available evidence, it is more likely than not the deferred tax assets will not be realized, we record a valuation allowance.
In assessing the need for a valuation allowance, we consider all available evidence, including our historical profitability and projections of future taxable income. If, based on the weight of available evidence, it is more likely than not the deferred tax assets will not be realized, we record a valuation allowance.
The two-class method is an earnings allocation formula that determines earnings per share for common stock and participating securities according to dividend and participation rights in undistributed earnings. Under this method, all earnings, distributed and undistributed, are allocated to common shares and participating securities based on their respective rights to receive dividends.
The two-class method is an earnings allocation formula that determines earnings per share for common stock and participating securities according to dividend and participation rights in undistributed earnings. Under this method, 49 all earnings, distributed and undistributed, are allocated to common shares and participating securities based on their respective rights to receive dividends.
Productivity improvements and proactive cost actions have been a key part of our operating model for the past several years, and we continue to identify and execute on efficiency 40 opportunities throughout our cost structure, while improving and investing in the overall student experience.
Productivity improvements and proactive cost actions have been a key part of our operating model for the past several years, and we continue to identify and execute on efficiency opportunities throughout our cost structure, while improving and investing in the overall student experience.
We are then 51 entitled to collect these funds from the students, but collection rates for these types of receivables is significantly lower than our collection rates for receivables for students who remain in our programs.
We are then entitled to collect these funds from the students, but collection rates for these types of receivables is significantly lower than our collection rates for receivables for students who remain in our programs.
Selling, general and administrative expenses include: compensation and benefits of employees who are not directly associated with the provision of educational services, such as: executive management, finance and central accounting, information technology, legal, human resources, marketing and student admissions; marketing and student enrollment expenses; professional services; bad debt expense; costs associated with the implementation and operation of our student management and reporting system; rent for our corporate office headquarters; depreciation and amortization of property and equipment that is not used in the provision of educational services; and other costs that are incidental to our operations.
Selling, general and administrative expenses include: compensation and benefits, including stock-based compensation, of employees who are not directly associated with the provision of educational services, such as executive management, finance and central accounting, information technology, legal, human resources, marketing and student admissions; marketing and student enrollment expenses; professional services; bad debt expense; costs associated with the implementation and operation of our student management and reporting system; rent for our corporate office headquarters; depreciation and amortization of property and equipment that is not used in the provision of educational services; and other costs that are incidental to our operations.
The receipt of financial aid and veterans benefit funds reduces the students’ amounts due to us and has no impact on revenue recognition, as the transfer relates to the source of funding for the costs of education which may occur through Title IV, veterans benefit or other funds and resources available to the student.
The receipt of financial aid and veterans’ benefit funds reduces the students’ amounts due to us and has no impact on revenue recognition, as the transfer relates to the source of funding for the costs of education which may occur through Title IV, veterans’ benefit or other funds and resources available to the student.
The loans bear interest at market rates ranging from approximately 7% to 10%; however, principal and interest payments are not required until six months after the student completes or withdraws from his or her program. After the deferral period, monthly principal and interest payments are required over the related term of the loan.
The loans bear interest at market rates ranging from approximately 6% to 10%; however, principal and interest payments are not required until six months after the student completes or withdraws from his or her program. After the deferral period, monthly principal and interest payments are required over the related term of the loan.
See Note 19 of the notes to our Consolidated Financial Statements within Part II, Item 8 of this Annual Report on Form 10-K for further discussion of the preferred stock. Income available for distribution Income available for distribution refers to net income reduced by dividends on our Series A Preferred Stock.
See Note 18 of the notes to our Consolidated Financial Statements within Part II, Item 8 of this Annual Report on Form 10-K for further discussion of the preferred stock. Income available for distribution Income available for distribution refers to net income reduced by dividends on our Series A Preferred Stock.
Income allocated to participating securities Our Series A Preferred Stock is considered a participating security because, in the event that we pay a dividend or make a distribution on the outstanding common stock, we shall also pay each holder of the Series A Preferred Stock a dividend on an as-converted basis.
Income allocated to participating securities Our Series A Preferred Stock is considered a participating security because, in the event that we pay a dividend or make a distribution on the outstanding common stock, we must also pay each holder of the Series A Preferred Stock a dividend on an as-converted basis.
Principal Sources of Liquidity Our principal source of liquidity is operating cash flows and existing cash and cash equivalents. A majority of our revenues are derived from Title IV Programs and various veterans benefits programs. Federal regulations dictate the timing of disbursements of funds under Title IV Programs.
Principal Sources of Liquidity Our principal source of liquidity is operating cash flows and existing cash and cash equivalents. A majority of our revenues are derived from Title IV Programs and various veterans’ benefits programs. Federal regulations dictate the timing of disbursements of funds under Title IV Programs.
Any repurchases under this new stock repurchase program require the approval of a majority of the voting power of our Series A Preferred Stock. We did not repurchase any shares during the years ended September 30, 2022, 2021, and 2020.
Any repurchases under this new stock repurchase program require the approval of a majority of the voting power of our Series A Preferred Stock. We did not repurchase any shares during the years ended September 30, 2023, 2022, and 2021.
Other capital expenditures included investments for new campuses in Austin, Texas and Miramar, Florida, the consolidation of the Orlando, Florida and Arizona campuses, and the rollout of new programs at our campuses. We purchased $28.8 million of short term held-to-maturity investments. Additionally, we purchased MIAT for $26.5 million, net of cash consideration received.
Other capital expenditures included investments for new UTI campuses in Austin, Texas and Miramar, Florida, the consolidation of the UTI Orlando, Florida and the UTI Arizona campuses, and the rollout of new 52 programs at the UTI campuses. We purchased $28.8 million of short term held-to-maturity investments. Additionally, we purchased MIAT for $26.5 million, net of cash consideration received.
For a discussion of the financial results of operations for the year ended September 30, 2021 compared to the year ended September 30 2020, refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Position and Results of Operations,” of our 202 1 Form 10-K filed with the SEC on December 2, 2021 which discussion is incorporated herein by reference and which is available free of charge on the SEC’s website at www.sec.gov.
For a discussion of the financial results of operations for the year ended September 30, 2022 compared to the year ended September 30 2021, refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Position and Results of Operations,” of our 202 2 Form 10-K filed with the SEC on December 12, 2022 which discussion is incorporated herein by reference and which is available free of charge on the SEC’s website at www.sec.gov.
For a discussion of our liquidity for the year ended September 30 2020, refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Position and Results of Operations,” of our 2021 Form 10-K filed with the SEC on December 2, 2021 which discussion is incorporated herein by reference and which is available free of charge on the SEC’s website at www.sec.gov.
For a discussion of our liquidity for the year ended September 30 2021, refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Position and Results of Operations,” of our 2022 Form 10-K filed with the SEC on December 12, 2022 which discussion is incorporated herein by reference and which is available free of charge on the SEC’s website at www.sec.gov.
Upon adoption of ASU 2016-13, Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326) as of October 1, 2020, we revised our estimated collection rate to only include historical collections from the past ten years as we determined that such population better represents our current expected collections and aligns with the typical term of the loan.
Upon adoption of Accounting Standards Update 2016-13, Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326) as of October 1, 2020, we revised our estimated collection rate to only include historical collections from the past ten years as we determined that such population better represents our current expected collections and aligns with the typical term of the loan.
As a result of the foregoing, we reported income available for distribution for the years ended September 30, 2022 and 2021 of $20.7 million and $9.3 million, respectively.
As a result of the foregoing, we reported income available for distribution for the years ended September 30, 2023 and 2022 of $7.3 million and $20.7 million, respectively.
Net income available to common shareholders After allocating the income to the participating securities, we had $12.8 million and $5.7 million of net income available to common shareholders for the years ended September 30, 2022 and 2021, respectively.
Net income available to common shareholders After allocating the income to the participating securities, we had $4.5 million and $12.8 million of net income available to common shareholders for the years ended September 30, 2023 and 2022, respectively.
Non-GAAP Financial Measures Our earnings before interest, tax, depreciation and amortization (“EBITDA”) for the years ended September 30, 2022, 2021 and 2020 were $38.8 million, $29.5 million and $9.4 million, respectively. We define EBITDA as net income (loss) for the year, before interest (income) expense, income tax (benefit) expense, and depreciation and amortization.
Non-GAAP Financial Measures Our earnings before interest, tax, depreciation and amortization (“EBITDA”) for the years ended September 30, 2023, 2022 and 2021 were $47.1 million, $38.8 million and $29.5 million, respectively. We define EBITDA as net income (loss) for the year, before interest (income) expense, income tax (benefit) expense, and depreciation and amortization.
As a result of our assessment, income tax benefit (expense) within our statements of operations was impacted by decreases of $12.1 million and $3.2 million in the valuation allowance during the years ended September 30, 2022 and 2021, respectively.
As a result of our assessment, income tax (expense) benefit within our statements of operations was impacted by a decrease of $0.2 million and $12.1 million in the valuation allowance during the years ended September 30, 2023 and 2022, respectively.
The introduction of additional program offerings at existing campuses and opening additional campuses is expected to influence our average full-time enrollment. We currently offer start dates at our campuses that range from every three to six weeks throughout the year in our core programs.
The introduction of additional program offerings at existing campuses and the opening of additional campuses is expected to influence our average full-time enrollment. UTI currently offers start dates at its campuses that range from every three to nine weeks throughout the year in the core programs.
Through the proprietary loan program, the bank provides the students who participate in this program with extended payment terms for a portion of their tuition. Based on historical collection rates, we can demonstrate that a portion of these loans are collectible.
Through the proprietary loan program, the bank originates the loans to the students who participate in this program for a portion of their tuition. Based on historical collection rates, we can demonstrate that a portion of these loans are collectible.
There was no impairment related to our other intangible assets. Income taxes We are subject to the income tax laws of the United States, which are complex and subject to different interpretations by the taxpayer and the relevant governmental taxing authorities. As a result, significant judgments and interpretations are required in determining our provision for income taxes.
Income taxes We are subject to the income tax laws of the United States, which are complex and subject to different interpretations by the taxpayer and the relevant governmental taxing authorities. As a result, significant judgments and interpretations are required in determining our provision for income taxes.
Approximately 67% of our revenues, on a cash basis, were collected from funds distributed under Title IV Programs for the year ended September 30, 2022 as calculated under the 90/10 rule. Additionally, approximately 13% of our revenues, on a cash basis, were collected from funds distributed under various veterans' benefits programs for the year ended September 30, 2022.
Approximately 67% of our revenues, on a cash basis, were collected from funds distributed under Title IV Programs for the year ended September 30, 2023 as calculated under the 90/10 rule.
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 consolidated balance sheets because it is expected to be earned within the next 12 months.
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 on our 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 financial aid and veterans' benefits programs are subject to political and budgetary considerations. There is no assurance that such funding will be maintained at current levels. Extensive and complex regulations govern the financial assistance programs in which our students participate. Our administration of these programs is periodically reviewed by various regulatory agencies.
There is no assurance that such funding will be maintained at current levels. Extensive and complex regulations govern the financial assistance programs in which our students participate. Our administration of these programs is periodically reviewed by various regulatory agencies.
The amount of income allocated to the participating securities for the years ended September 30, 2022 and 2021 was $7.8 million and $3.6 million, respectively.
The amount of income allocated to the participating securities for the years ended September 30, 2023 and 2022 was $2.7 million and $7.8 million, respectively.
Our ability to start new students continues to be influenced by various factors including: unemployment rates; competition; adverse media coverage, legislative hearings, regulatory actions and investigations by attorneys general and various agencies related to allegations of wrongdoing on the part of other companies within the education and training services industry, which have cast the industry in a negative light; and the state of the general macro-economic environment and its impact on price sensitivity and the ability and willingness of students and their families to incur debt.
Our ability to start new students can be influenced by various factors including: the state of the general macro-economic environment and its impact on price sensitivity and the ability and willingness of students and their families to incur debt to fund their education; unemployment rates; competition; adverse media coverage; legislative, or regulatory actions and investigations by attorneys general and various agencies related to allegations of wrongdoing on the part of other companies within the education and training services industry, which can cast the aggregate “for-profit” education industry in a negative light; and pandemics and or other national, state or local emergencies as declared by various government authorities.
Proprietary Loan Program In order to provide funding for students who are not able to fully finance the cost of their education under traditional governmental financial aid programs, commercial loan programs or other alternative sources, we established a private loan program with a bank.
Proprietary Loan Program In order to provide funding for students who are not able to fully finance the cost of their education under traditional governmental financial aid programs, commercial loan programs or other alternative sources, we established a private loan program with a bank. This program is currently offered to students at our UTI and MMI branded schools.
The purchase of property and equipment was partially offset by proceeds from maturities of held-to-maturity securities of $37.7 million. 48 Financing Activities For the year ended September 30, 2022, net cash provided by financing activities was $12.6 million which was primarily related to proceeds from our new term loan for the Lisle Campus of $38.0 million offset by the repayment of long-term debt of $19.2 million and the semi-annual payments of preferred stock dividends of $5.2 million.
For the year ended September 30, 2022, net cash provided by financing activities was $12.6 million which was primarily related to proceeds from the term loan related to the UTI Lisle, Illinois campus purchase of $38.0 million, offset by the repayment of long-term debt of $19.2 million and the semi-annual payments of preferred stock dividends of $5.2 million.
Operating Activities Our net cash provided by operating activities was $46.0 million and $55.2 million for the years ended September 30, 2022 and 2021, respectively. 47 Net income, after adjustments for non-cash items, provided cash of $64.8 million for the year ended September 30, 2022.
Operating Activities Our net cash provided by operating activities was $49.1 million and $46.0 million for the years ended September 30, 2023 and 2022, respectively. Net income, after adjustments for non-cash items, provided cash of $71.8 million for the year ended September 30, 2023.
For our outstanding Series A preferred shares, we paid preferred stock cash dividends of $5.2 million and $5.3 million during the years ended September 30, 2022 and 2021, respectively. The preferred stock dividends are subject to adjustment for any preferred stock conversions that occur during the year.
Dividends We currently do not pay a cash dividend on our common stock. For our outstanding Series A preferred shares, we paid preferred stock cash dividends of $5.1 million and $5.2 million during the years ended September 30, 2023 and 2022, respectively. The preferred stock dividends are subject to adjustment for any preferred stock conversions that occur during the year.
The effective income tax rate in each period differed from the federal statutory tax rate of 21% primarily as a result of changes in the valuation allowance and state taxes.
The effective income tax rate for the year ended September 30, 2022 differed from the federal statutory rate of 21% primarily as a result of changes in the valuation allowance and state taxes.
Financial Aid Most students at our campuses rely on funds received under various government-sponsored student financial aid programs, predominantly Title IV Programs and various veterans' benefits programs, to pay a substantial portion of their tuition and other education-related expenses.
We regularly evaluate our tuition pricing based on individual campus markets, the competitive environment and ED regulations. Financial Aid Most students at our campuses rely on funds received under various government-sponsored student financial aid programs, predominantly Title IV Programs and various veterans' benefits programs, to pay a substantial portion of their tuition and other education-related expenses.
Strategic Uses of Cash We believe that additional strategic uses of our cash resources may include consideration of acquisitions, the repurchase of common stock, purchase of real estate assets, new campus openings or expansion of programs at existing campuses and subsidizing funding alternatives for our students, among others.
We believe that additional uses of our cash resources may include consideration of strategic acquisitions and organic growth initiatives, purchase of real estate assets, subsidizing funding alternatives for our students, and the repurchase of common stock, among others.
Revenues (Dollars shown in thousands) Year Ended September 30, 2022 2021 2020 Three Month Period Ending: Amount Percent Amount Percent Amount Percent December 31 $ 105,075 25.1 % $ 76,125 22.7 % $ 87,234 29.0 % March 31 102,086 24.4 % 77,709 23.2 % 82,717 27.5 % June 30 100,966 24.1 % 83,768 25.0 % 54,483 18.1 % September 30 110,638 26.4 % 97,481 29.1 % 76,327 25.4 % Fiscal year $ 418,765 100.0 % $ 335,083 100.0 % $ 300,761 100.0 % 49 The increase in revenues for each of the three months ended December 31, 2021, March 31, 2022, June 30, 2022 and September 30, 2022, as compared to the same periods in fiscal 2021, was primarily due to an increase in student population during fiscal 2022, in conjunction with the acquisition of MIAT.
Revenues (Dollars shown in thousands) Year Ended September 30, 2023 2022 2021 Three Month Period Ending: Amount Percent Amount Percent Amount Percent December 31 $ 120,004 19.8 % $ 105,075 25.1 % $ 76,125 22.7 % March 31 163,820 27.0 % 102,086 24.4 % 77,709 23.2 % June 30 153,286 25.2 % 100,966 24.1 % 83,768 25.0 % September 30 170,298 28.0 % 110,638 26.4 % 97,481 29.1 % Total fiscal year $ 607,408 100.0 % $ 418,765 100.0 % $ 335,083 100.0 % The increase in revenues for each of the three months ended December 31, 2022, March 31, 2023, June 30, 2023 and September 30, 2023, as compared to the same periods in fiscal 2022, was due to an increase in student population during fiscal 2023 primarily related to the acquisition of Concorde. 53 The increase in revenues for each of the three months ended December 31, 2021, March 31, 2022, June 30, 2022 and September 30, 2022, as compared to the same periods in fiscal 2021, was primarily due to an increase in student population during fiscal 2022 in conjunction with the acquisition of MIAT.
The increase in income from operations from December 31, 2020 to September 30, 2021 was primarily due to increased revenue as well as continued execution of cost control measures. Effect of Inflation To date, inflation has not had a significant effect on our operations.
The increase in income from operations for fiscal year 2022 was primarily due to increased revenues well as continued execution of cost control measures. Effect of Inflation To date, inflation has not had a significant effect on our operations.
The acquisition aligns with our growth and diversification strategy, which is focused on offering a broader array of high-quality, in-demand workforce 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 acquisition aligns with 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. • In March 2023, we purchased the three primary buildings and the associated land at our UTI Orlando, Florida campus which were previously leased.
Revenue recognition Revenues 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.
Revenue recognition Revenues 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 Topic 606, Revenue from Contracts from Customers (“ASC 606”).
Of the $68.1 million outstanding, $30.1 million relates to a term loan that bears interest at the rate of LIBOR plus 2.0% over the seven year term secured in connection with the Avondale, Arizona campus property purchased in December 2020.
Of the $162.6 million outstanding, $29.3 million relates to a term loan that bears interest at the rate of Term SOFR plus 2.0% and a tranche rate adjustment of 0.046% over the seven-year term secured in connection with the UTI Avondale, Arizona campus property purchased in December 2020.
We extend credit for tuition and fees, for a limited period of time, to the majority of our students. Our credit risk is mitigated through the students’ participation in federally funded financial aid and veterans' benefit programs unless students withdraw prior to the receipt by us of Title IV or veterans' benefit funds for those students.
Our credit risk is mitigated through the students’ participation in federally funded financial aid and veterans' benefit programs unless students withdraw prior to the receipt by us of Title IV or veterans' benefit funds for those students. The financial aid and veterans' benefits programs are subject to political and budgetary considerations.
See Notes 2 and 11 of the notes to our Consolidated Financial Statements within Part II, Item 8 of this Annual Report on Form 10-K for further discussion.
See Note 22 of the notes to our Consolidated Financial Statements within Part II, Item 8 of this Annual Report on Form 10-K for additional details on our segments.
Educational services and facilities expenses Our educational services and facilities expenses for the year ended September 30, 2022 were $207.2 million, representing an increase of $40.4 million, or 24.2%, as compared to $166.8 million for the year ended September 30, 2021.
Educational services and facilities expenses Our educational services and facilities expenses for the year ended September 30, 2023 were $329.9 million, representing an increase of $122.6 million, or 59.2%, as compared to $207.2 million for the year ended September 30, 2022.
Determining the fair value of indefinite-lived intangible assets is judgmental in nature and involves the use of significant estimates and assumptions. We believe the most critical assumptions and estimates in determining the estimated fair value of our reporting units include, but are not limited to, future tuition revenues, operating costs, working capital changes, capital expenditures and a discount rate.
We believe the most critical assumptions and estimates in determining the estimated 55 fair value include, but are not limited to, future tuition revenues, operating costs, working capital changes, capital expenditures and a discount rate.
Year Ended September 30, 2022 2021 2020 Revenues 100.0 % 100.0 % 100.0 % Operating expenses: Educational services and facilities 49.5 % 49.8 % 51.9 % Selling, general and administrative 45.2 % 45.8 % 49.4 % Total operating expenses 94.7 % 95.6 % 101.3 % Income (loss) from operations 5.3 % 4.4 % (1.3) % Interest (expense) income, net (0.4) % (0.1) % 0.4 % Other (expense) income (0.1) % 0.2 % — % Total other (expense) income, net (0.5) % 0.1 % 0.4 % Income (loss) before income taxes 4.8 % 4.5 % (0.9) % Income tax benefit (expense) 1.3 % (0.2) % 3.5 % Net income 6.1 % 4.3 % 2.6 % Preferred stock dividends (1.2) % (1.6) % (1.8) % Income available for distribution 4.9 % 2.7 % 0.8 % Income allocated to participating securities (1.9) % (1.1) % (0.4) % Net income available to common shareholders 3.0 % 1.6 % 0.4 % Year Ended September 30, 2022 Compared to Year Ended September 30, 2021 Revenues Our revenues for the year ended September 30, 2022 were $418.8 million, an increase of $83.7 million, or 25.0%, as compared to revenues of $335.1 million for the year ended September 30, 2021.
Year Ended September 30, 2023 2022 2021 Revenues 100.0 % 100.0 % 100.0 % Operating expenses: Educational services and facilities 54.3 % 49.5 % 49.8 % Selling, general and administrative 42.2 % 45.2 % 45.8 % Total operating expenses 96.5 % 94.7 % 95.6 % Income from operations 3.5 % 5.3 % 4.4 % Interest (expense) income, net (0.6) % (0.4) % (0.1) % Other income (expense) 0.1 % (0.1) % 0.2 % Total other (expense) income, net (0.5) % (0.5) % 0.1 % Income before income taxes 3.0 % 4.8 % 4.5 % Income tax (expense) benefit (0.9) % 1.3 % (0.2) % Net income 2.1 % 6.1 % 4.3 % Preferred stock dividends (0.8) % (1.2) % (1.6) % Income available for distribution 1.3 % 4.9 % 2.7 % Income allocated to participating securities (0.4) % (1.9) % (1.1) % Net income available to common shareholders 0.9 % 3.0 % 1.6 % Year Ended September 30, 2023 Compared to Year Ended September 30, 2022 Revenues The following table presents revenue by segment (in thousands): Year ended September 30, 2023 Year ended September 30, 2022 UTI Concorde Consolidated UTI Concorde Consolidated Revenue $ 429,317 $ 178,091 $ 607,408 $ 418,765 $ — $ 418,765 Year over Year % Change 2.5 % 100.0 % 45.0 % Our revenues for the year ended September 30, 2023 were $607.4 million, an increase of $188.6 million, or 45.0%, as compared to revenues of $418.8 million for the year ended September 30, 2022.
Pursuant to the terms of the certificate of designation defining the rights, preferences, and privileges of the Series A Preferred Stock, we paid preferred stock cash dividends totaling $5.2 million and $5.3 million during the years ended September 30, 2022 and 2021, respectively.
Pursuant to the Certificate of Designations of the Series A Preferred Stock, we paid preferred stock cash dividends of $5.1 million and $5.2 million during the years ended September 30, 2023 and 2022, respectively.
The remaining $38.0 million relates to a term loan that bears interest at the rate of SOFR plus 2.0% over the seven year term, secured in connection with the purchase of the Lisle Campus property in February 2022.
Approximately $37.7 million relates to a term loan that bears interest at the rate of Term SOFR plus 2.0% over the seven-year term, secured in connection with the purchase of the UTI Lisle, Illinois campus property in February 2022. Approximately $5.6 million relates to a finance lease for a campus within our Concorde segment.
To the extent that potential acquisitions are large enough to require financing beyond cash from operations, cash and cash equivalents, and held-to-maturity investments, or we need capital to fund operations or other new organic investments, we may enter into additional credit facilities, issue debt or issue additional equity.
To the extent that potential acquisitions are large enough to require financing beyond cash from operations, cash and cash equivalents, short-term investments, or available revolving credit facility capacity, or we need capital to fund operations, new campus openings or expansion of programs at existing campuses, we may enter into additional credit facilities, issue debt or issue additional equity.
Our cash position is available to fund strategic long-term growth initiatives, including opening additional campuses in new markets and the creation and expansion of new programs, such as welding, in existing markets and campus facilities. Our total liquidity as of September 30, 2022 was $95.4 million, including cash and cash equivalents of $66.5 million and $28.9 million of held-to-maturity investments.
Our cash position is available to fund strategic long-term growth initiatives, including opening additional campuses in new markets and the creation and expansion of new programs, such as welding, in existing markets and campus facilities.
We recognized $9.1 million on an accrual basis related to revenues and interest under the proprietary loan program for the year ended September 30, 2022, as compared to $9.7 million recognized for the year ended September 30, 2021.
We recognized $8.8 million on an accrual basis related to revenues and interest under the proprietary loan program for the year ended September 30, 2023, as compared to $9.1 million recognized for the year ended September 30, 2022. 46 Concorde Revenues for Concorde, which represent ten months as Concorde was acquired on December 1, 2022, were $178.1 million.
We also provide dealer technician training or instructor staffing services to manufacturers, and we recognize revenue as the transfer of services occurs.
UTI also provides dealer technician training or instructor staffing services to manufacturers where revenue is recognized as the transfer of services occurs.
Surety Bonds Each of our campuses must be authorized by the applicable state education agency in which the campus is located to operate and to grant certificates, diplomas or degrees to its students. Our campuses are subject to extensive, ongoing regulation by each of these states.
These factors, together with the timing of when our students begin their programs, affect the timing and seasonality of our operating cash flow. Surety Bonds Each of our campuses must be authorized by the applicable state education agency in which the campus is located to operate and to grant certificates, diplomas or degrees to its students.
Furthermore, our revenues for the first quarter ending December 31 are impacted by the closure of our campuses for a week in December for a holiday break and during which we do not earn revenue.
Such patterns may change, however, as a result of new school openings, new program introductions, increased enrollments of adult students or acquisitions. Furthermore, our revenues for the first quarter ending December 31 are impacted by the closure of our campuses for a week in December for a holiday break and during which we do not earn revenue.
We apply the five-step model outlined in Accounting Standards Codification Topic 606, Revenue from Contracts from 50 Customers (“ASC 606”). Tuition and fee revenue is recognized ratably over the term of the course or program offered. Approximately 99% of our revenues for each of the years ended September 30, 2022, 2021 and 2020, respectively, consisted of gross tuition.
Tuition and fee revenue is recognized ratably over the term of the course or program offered. Approximately 99% of our revenues for each of the years ended September 30, 2023, 2022 and 2021, respectively, consisted of gross tuition.
Our student population varies as a result of new student enrollments, graduations and student attrition. Historically, we have had lower student populations in our third quarter than in the remainder of our year because fewer students are enrolled during the summer months.
Historically, we have had lower student populations in our third quarter than in the remainder of our year because fewer students are enrolled during the summer months. Additionally, we have had higher student populations in our fourth quarter than in the remainder of the year because more students enroll during this period.
Income (Loss) from Operations (Dollars shown in thousands) Year Ended September 30, 2022 2021 2020 Three Month Period Ending: Amount Percent Amount Percent Amount Percent December 31 $ 13,578 60.7 % $ 775 5.2 % $ 4,254 (109.9) % March 31 3,377 15.1 % (1,661) (11.1) % (499) 12.9 % June 30 1,954 8.7 % 3,052 20.4 % (13,779) 356.0 % September 30 3,465 15.5 % 12,781 85.5 % 6,153 (159.0) % Fiscal year $ 22,374 100.0 % $ 14,947 100.0 % $ (3,871) 100.0 % The increase in income from operations for fiscal year 2022 was primarily due to increased revenues well as continued execution of cost control measures.
Income (Loss) from Operations (Dollars shown in thousands) Year Ended September 30, 2023 2022 2021 Three Month Period Ending: Amount Percent Amount Percent Amount Percent December 31 $ 4,448 20.8 % $ 13,578 60.7 % $ 775 5.2 % March 31 5,949 27.8 % 3,377 15.1 % (1,661) (11.1) % June 30 663 3.1 % 1,954 8.7 % 3,052 20.4 % September 30 10,339 48.3 % 3,465 15.5 % 12,781 85.5 % Total fiscal year $ 21,399 100.0 % $ 22,374 100.0 % $ 14,947 100.0 % The decrease in income from operations for fiscal year 2023 was primarily due to increased compensation related costs primarily due to an increase in headcount to support our growth, diversification and optimization initiatives.
We supplement our revenues with sales of textbooks and program supplies and other revenues, which are recognized as the transfer of goods or services occurs.
We supplement our tuition and fee revenues with additional revenues from sales of textbooks and program supplies and other revenues, which are recognized as the transfer of goods or services occurs. Tuition revenue and fees generally vary based on the average number of students enrolled and average tuition charged per program.
Additionally, we offer manufacturer specific advanced training (“MSAT”) programs, including student-paid electives, at our campuses and manufacturer or dealer sponsored training at certain campuses and dedicated training centers. 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 offer the majority of our programs in a blended learning model that combines instructor-facilitated online teaching and demonstrations with hands-on labs.
Investing Activities For the year ended September 30, 2022, net cash used in investing activities was $134.6 million. The cash outflow was primarily related to the purchase of property and equipment of $79.5 million, of which $28.7 million related to the purchase of the Lisle Campus.
The cash outflow was primarily related to the purchase of property and equipment of $79.5 million, of which $28.7 million related to the purchase of the UTI Lisle, Illinois campus.
Changes in operating assets and liabilities for the year ended September 30, 2021 used cash of $7.4 million primarily due to the following: • The increase in deferred revenue used cash of $17.0 million and was primarily attributable to the timing of student starts, the number of students in school and where they were at period end in relations to completion of their program at September 30, 2021 as compared to September 30, 2019. • The decrease in receivables provided cash of $8.5 million and was primarily due to the timing of Title IV disbursements and other cash receipts on behalf of our students. • The decrease in the income taxes receivable provided cash of $7.1 million and was primarily attributable to receipt of the remaining income tax refund originally recorded in fiscal 2020 as a result of the CARES Act which allowed us to carryback NOLs from previous years. • Changes in our operating lease liability as a result of rent payments used cash of $20.5 million. • The increase in prepaid expense and other current liabilities used cash of $4.4 million primarily related to the timing of payments to vendors and bonus accruals.
Changes in operating assets and liabilities for the year ended September 30, 2023 used cash of $22.7 million primarily due to the following: • Changes in our operating lease liability as a result of rent payments used cash of $20.5 million. • The change in deferred revenue provided cash of $11.4 million and was primarily attributable to the timing of student starts, the number of students in school and where they were at period end in relation to completion of their program at September 30, 2023 as compared to September 30, 2022. • Changes in our accounts payable and accrued expenses due to the timing of payments used cash of $5.9 million. • The increase in receivables used cash of $4.9 million and was primarily due to the timing of Title IV disbursements and other cash receipts on behalf of our students.
Costs related to the opening of new facilities, excluding related capital expenditures, are expensed in the period incurred or when services are provided. 2022 Overview Student Metrics September 30, 2022 September 30, 2021 % Change Total new student starts 13,374 13,028 2.7 % Average undergraduate full-time active students 12,838 11,489 11.7 % End of period undergraduate full-time active students 14,380 13,682 5.1 % The increase in new student starts, average undergraduate full-time active students and end of period undergraduate full-time active students was due to strong student demand throughout fiscal 2021 and the acquisition of MIAT in November 2021.
Costs related to the opening of new facilities, excluding related capital expenditures, are expensed in the period incurred or when services are provided. 2023 Overview Student Metrics September 30, 2023 September 30, 2022 % Change UTI Total new student starts 14,181 13,374 6.0 % Average undergraduate full-time active students 12,614 12,838 (1.7) % End of period undergraduate full-time active students 14,833 14,380 3.2 % Concorde Total new student starts 8,432 — 100.0 % Average undergraduate full-time active students 7,654 — 100.0 % End of period undergraduate full-time active students 8,369 — 100.0 % Consolidated Total new student starts 22,613 13,374 69.1 % Average undergraduate full-time active students 20,268 12,838 57.9 % End of period undergraduate full-time active students 23,202 14,380 61.3 % 44 The increase in consolidated new student starts, average undergraduate full-time active students and end of period undergraduate full-time active students was due primarily to the acquisition of Concorde in December 2022.
Under the proprietary loan program, we bear all credit and collection risk and students are not required to begin repayment until six months after the student completes or withdraws from his or her program. These factors, together with the timing of when our students begin their programs, affect our operating cash flow.
Under our UTI proprietary loan program, we bear all credit and collection risk and students are not required to begin repayment until six months after the student completes or withdraws from his or her program. Similarly, we bear all credit and collection risk for students paying through UTI cash payment plans and those under a retail installment contract at Concorde.
The increase is primarily related to an increased cost of tools of $2.1 million due to our new campus openings and books of $1.3 million due to our increased number of students. 43 Selling, general and administrative expenses Our selling, general and administrative expenses for the year ended September 30, 2022 were $189.2 million, representing an increase of $35.8 million, or 23.4%, as compared to $153.3 million for the year ended September 30, 2021.
Selling, general and administrative expenses Our selling, general and administrative expenses for the year ended September 30, 2023 were $256.1 million, representing an increase of $67.0 million, or 35.4%, as compared to $189.2 million for the year ended September 30, 2022.
We are obligated to reimburse our insurers for any surety bonds that are paid by the insurers. As of September 30, 2022, the total face amount of these surety bonds was approximately $20.5 million.
Our insurers issue surety bonds for us on behalf of our campuses and admissions representatives with multiple states to maintain authorization to conduct our business. We are obligated to 51 reimburse our insurers for any surety bonds that are paid by the insurers. As of September 30, 2023, the total face amount of these surety bonds was approximately $22.3 million.
Other selling, general and administrative expenses increased by $7.5 million for the year ended September 30, 2022, as compared to the prior year, due to an increase of $1.9 million in travel and entertainment costs, $1.0 million for software, and $0.8 million for bad debt expense. The increase was also due to acquisition of MIAT which represented $3.9 million.
Other selling, general and administrative expenses decreased by $1.8 million for the year ended September 30, 2023, as compared to the prior year, due to a decrease of $0.9 million for bad debt expense and $0.8 million for employee recruitment and hiring.
For a description of additional information regarding related party transactions, see the information included in our proxy statement for the 2023 Annual Meeting of Stockholders under the heading “Certain Relationships and Related Transactions.” Seasonality Our operating results normally fluctuate as a result of seasonal variations in our business, principally due to changes in total student population and costs associated with opening or expanding our campuses.
Seasonality Our operating results normally fluctuate as a result of seasonal variations in our business, principally due to changes in total student population and costs associated with opening or expanding our campuses. Our student population varies as a result of new student enrollments, graduations and student attrition.
Professional services increased by $3.3 million and contract services expense increased by $0.3 million for the year ended September 30, 2022. The increases were primarily due to costs incurred related to our growth and diversification initiatives, including the acquisition of MIAT which closed in November 2021 and pre-closing costs associated with the acquisition of Concorde, which closed in December 2022.
Advertising expense as a percentage of revenues decreased to 12.3% for the year ended September 30, 2023 as compared to 13.0% in the prior year. 48 Professional and contract services increased by $3.7 million for the year ended September 30, 2023. The increases were primarily due to costs incurred related to our growth, diversification and optimization initiatives.
The assumptions used in determining our expected future cash flows consider various factors such as historical operating trends particularly in student enrollment and pricing and long-term operating strategies and initiatives. We also have definite-lived intangible assets, which primarily consist of purchased intangibles and capitalized curriculum development costs. The definite-lived intangible assets are recognized at cost less accumulated amortization.
The assumptions used in determining our expected future cash flows consider various factors such as historical operating trends particularly in student enrollment and pricing and long-term operating strategies and initiatives. As a result, significant judgments and interpretations are required in determining the value of acquired goodwill and intangible assets.
See Note 26 of the notes to our Consolidated Financial Statements within Part II, Item 8 of this Annual Report on Form 10-K for additional details on this subsequent event item. Dividends We currently do not pay a cash dividend on our common stock.
See the “Liquidity and Capital Resources” section of this MD&A for a discussion on the financing used to fund the acquisition. See Note 4 of the notes to our Consolidated Financial Statements within Part II, Item 8 of this Annual Report on Form 10-K for additional details on the acquisition.
For the year ended September 30, 2021, net cash provided by financing activities was $24.8 million which was primarily the result of the $31.2 million in proceeds received from the financing of the Avondale, Arizona property in May 2021. This was partially offset by our semi-annual payments of preferred stock dividends of $5.3 million.
Financing Activities For the year ended September 30, 2023, net cash provided by financing activities was $81.8 million which was primarily related to proceeds from our revolving credit facility of $90.0 million, offset by the semi-annual payments of preferred stock dividends of $5.1 million, and the repayment of long-term debt of $1.8 million.
See Note 4 of the notes to our Consolidated Financial Statements within Part II, Item 8 of this Annual Report on Form 10-K for additional details on the acquisition. During February 2022, we purchased the Lisle Campus for approximately $28.7 million, in cash plus assumed debt, including closing costs and other fees.
The net cash consideration, taking into account cash acquired from Concorde, was $16.4 million. See Note 4 of the notes to our Consolidated Financial Statements within Part II, Item 8 of this Annual Report on Form 10-K for additional details on the acquisition.
For more information, see Item 1A. “Risk Factors.” Operations Our revenues for the year ended September 30, 2022 were $418.8 million, an increase of $83.7 million, or 25.0%, from the prior year.
For more information, see Item 1A. “Risk Factors.” Operations Our revenues for the year ended September 30, 2023 were $607.4 million, an increase of $188.6 million, or 45.0%, from the prior year. Excluding Concorde, which contributed $178.1 million of revenue between December 1, 2022 and September 30, 2023, UTI revenues increased 2.5% when compared to the prior year.
Net income, after adjustments for non-cash items, for the year ended September 30, 2021 provided cash of $47.7 million. The non-cash items included $15.6 million for amortization of right-of -use assets for operating leases, $14.0 million for depreciation and amortization expense, $1.7 million for stock-based compensation expense, and $1.7 million for bad debt expense.
The non-cash items included $25.2 million for depreciation and amortization expense, $20.6 million for amortization of right-of-use assets for operating leases, $4.6 million of deferred taxes, $3.8 million for stock-based compensation expense and $3.3 million for bad debt expense.
Additionally, our campuses are required to be authorized by the applicable state education agencies of certain other states in which our campuses recruit students. Our insurers issue surety bonds for us on behalf of our campuses and admissions representatives with multiple states to maintain authorization to conduct our business.
Our campuses are subject to extensive, ongoing regulation by each of these states. Additionally, our campuses are required to be authorized by the applicable state education agencies of certain other states in which our campuses recruit students.
Additionally, actual operating results and the underlying amount and category of income in future years could render our current assessment of recoverable deferred tax assets inaccurate.
Additionally, actual operating results and the underlying amount and category of income in future years could render our current assessment of recoverable deferred tax assets inaccurate. Recent Accounting Pronouncements As of September 30, 2023, there were no recently issued accounting pronouncements which are not yet effective that are expected to have an impact on our financial statements.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs of September 30, 2022, we held $66.5 million in cash and cash equivalents and $28.9 million in held-to-maturity investments. During the fiscal year ended September 30, 2022, we earned interest income of $0.5 million. As we have a restrictive investment policy, our financial exposure to fluctuations in interest rates related to our interest income is expected to remain low.
Biggest changeDuring the fiscal year ended September 30, 2023, we earned interest income of $5.9 million. As we have a conservative investment policy, our financial exposure to fluctuations in interest rates related to our interest income is expected to remain low.
On April 14, 2022, we entered into a credit agreement to finance the Lisle Campus through a $38.0 million term loan that bears interest at the rate of SOFR plus 2.0% with a maturity of seven years.
On April 14, 2022, we entered into a credit agreement to finance the UTI Lisle, Illinois campus through a $38.0 million term loan that bears interest at the rate of Term SOFR plus 2.0% with a maturity of seven years.
The variable rate of interest on our long-term debt can expose us to interest rate volatility due to changes in LIBOR and SOFR.
The variable rate of interest on our long-term debt can expose us to interest rate volatility due to changes in Term SOFR.
To mitigate this exposure, we entered into interest rate swap agreements that effectively fix the interest rates on 50% of the principal amounts of the term loans at 3.5% and 4.69% for the entire loan term on our Avondale debt and Lisle debt, respectively.
To mitigate this exposure, we entered into interest rate swap agreements that effectively fix the interest rates on 50% of the principal amounts of the term loans at 1.45% and 4.69% for the entire loan term on our Avondale debt and Lisle debt, respectively.
We do not believe that the value or liquidity of our cash and cash equivalents and held-to-maturity investments have been significantly impacted by current market events.
We do not believe that the value or liquidity of our cash and cash equivalents and investments have been significantly impacted by current market events.
It is anticipated that the fair market value of our debt will continue to be immaterially affected by fluctuations in interest rates and we do not believe that the value of our debt has been significantly impacted by current market events.
It is anticipated that the fair market value of our Avondale and Lisle term loans will continue to be immaterially affected by fluctuations in interest rates and we do not believe that the value of this debt has been significantly impacted by current market events.
On May 12, 2021, we entered into a credit agreement to finance the Avondale property through a $31.2 million term loan that bears interest at the rate of LIBOR plus 2.0% with a maturity of seven years.
On May 12, 2021, we entered into a credit agreement to finance the UTI Avondale, Arizona campus through a $31.2 million term loan that bore interest at the rate of LIBOR plus 2.0% with a maturity of seven years.
Assuming all terms of our outstanding long-term debt remained the same, a hypothetical 10.0% change (up or down) in the 53 one-month LIBOR would result in a $3.4 million change to our annual interest expense for the portion of the long-term debt not hedged by the interest rate swap agreement.
Assuming all terms of our outstanding long-term debt remained the same, a hypothetical 10.0% change (up or down) in the variable rates would result in a $12.3 million change to our annual interest expense for the portion of the long-term debt not hedged by the interest rate swap agreement.
During the fiscal year ended September 30, 2022, we recorded interest expense of $2.0 million on our outstanding debt.
During the fiscal year ended September 30, 2023, we recorded interest expense of $9.7 million on our outstanding debt.
We believe the carrying value of the debt approximates fair value as the interest rate is a floating rate equal to the LIBOR or SOFR plus 2.0%, which is representative of market rates for similar instruments.
We believe the carrying value of the Avondale and Lisle term loans approximate fair value as the interest rate is a floating rate equal to Term SOFR plus 2.0%, which is representative of market rates for similar instruments.
As of September 30, 2022, the fair value of our long-term debt was $38.0 million and bears interest on the outstanding principal amount at a rate equal to the SOFR plus 2.0%, which was 4.51% as of September 30, 2022.
As of September 30, 2023, the fair value of the Lisle term loan was $37.7 million and bears interest on the outstanding principal amount at a rate equal to Term SOFR plus 2.0%, which was 7.33% as of September 30, 2023.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Our principal exposure to market risk relates to changes in interest rates. We invest our cash and cash equivalents and short-term investments in money market funds and short-term corporate and municipal bonds.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Our principal exposure to market risk relates to changes in interest rates. We invest our cash and cash equivalents in money market funds. As of September 30, 2023, we held $151.5 million in cash and cash equivalents.
As of September 30, 2022, the fair value of our long-term debt was $30.1 million and bears interest on the outstanding principal amount at a rate equal to the LIBOR plus 2.0%, which was 4.56% as of September 30, 2022.
As of September 30, 2023, the fair value of the Avondale term loan was $29.3 56 million and bears interest on the outstanding principal amount at a rate equal to Term SOFR plus 2.0% and a tranche adjustment of 0.046%, which was 7.38% as of September 30, 2023.
Added
On April 3, 2023, in connection with applying the guidance in Accounting Standards Update 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting , we executed an amendment for our Avondale term loan to convert the stated rate from LIBOR to Term SOFR.
Added
On November 18, 2022, we entered into a $100.0 million senior secured revolving credit facility that bears variable interest in a maturity of three years. On November 28, 2022, we drew $90.0 million from the credit facility in support of the closing of the Concorde acquisition.

Other UTI 10-K year-over-year comparisons