Vocational education Universal Technical Institute (NYSE:UTI) reported Q4 CY2024 results exceeding the market’s revenue expectations, with sales up 15.3% year on year to $201.4 million. The company’s full-year revenue guidance of $815 million at the midpoint came in 1.2% above analysts’ estimates. Its GAAP profit of $0.40 per share was significantly above analysts’ consensus estimates.
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Universal Technical Institute (UTI) Q4 CY2024 Highlights:
- Revenue: $201.4 million vs analyst estimates of $193.9 million (15.3% year-on-year growth, 3.9% beat)
- EPS (GAAP): $0.40 vs analyst estimates of $0.18 (significant beat)
- Adjusted EBITDA: $35.51 million vs analyst estimates of $25.53 million (17.6% margin, 39.1% beat)
- The company slightly lifted its revenue guidance for the full year to $815 million at the midpoint from $807.5 million
- EPS (GAAP) guidance for the full year is $1 at the midpoint, beating analyst estimates by 3.1%
- EBITDA guidance for the full year is $124 million at the midpoint, above analyst estimates of $121.6 million
- Operating Margin: 13.6%, up from 8.1% in the same quarter last year
- Free Cash Flow Margin: 9.7%, up from 4% in the same quarter last year
- New Students: 5,313, up 967 year on year
- Market Capitalization: $1.54 billion
"In the first quarter of 2025, we continued to deliver on our growth, diversification, and optimization strategy, leading to outperformance across our key financial and operational metrics," said Jerome Grant, CEO of Universal Technical Institute, Inc.
Company Overview
Founded in 1965, Universal Technical Institute (NYSE: UTI) is a leading provider of technical training programs, specializing in automotive, diesel, collision repair, motorcycle, and marine technicians.
Education Services
A whole industry has emerged to address the problem of rising education costs, offering consumers alternatives to traditional education paths such as four-year colleges. These alternative paths, which may include online courses or flexible schedules, make education more accessible to those with work or child-rearing obligations. However, some have run into issues around the value of the degrees and certifications they provide and whether customers are getting a good deal. Those who don’t prove their value could struggle to retain students, or even worse, invite the heavy hand of regulation.
Sales Growth
A company’s long-term sales performance signals its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, Universal Technical Institute grew its sales at a decent 17.7% compounded annual growth rate. Its growth was slightly above the average consumer discretionary company and shows its offerings resonate with customers.
Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. Universal Technical Institute’s annualized revenue growth of 32.3% over the last two years is above its five-year trend, suggesting its demand recently accelerated. 
We can better understand the company’s revenue dynamics by analyzing its number of new students, which reached 5,313 in the latest quarter. Over the last two years, Universal Technical Institute’s new students averaged 48.8% year-on-year growth. Because this number is higher than its revenue growth during the same period, we can see the company’s monetization has fallen. 
This quarter, Universal Technical Institute reported year-on-year revenue growth of 15.3%, and its $201.4 million of revenue exceeded Wall Street’s estimates by 3.9%.
Looking ahead, sell-side analysts expect revenue to grow 8.6% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and suggests its products and services will see some demand headwinds.
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Cash Is King
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
Universal Technical Institute has shown weak cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 5.5%, subpar for a consumer discretionary business.
Universal Technical Institute’s free cash flow clocked in at $19.62 million in Q4, equivalent to a 9.7% margin. This result was good as its margin was 5.7 percentage points higher than in the same quarter last year, but we wouldn’t read too much into the short term because investment needs can be seasonal, causing temporary swings. Long-term trends trump fluctuations.
Over the next year, analysts predict Universal Technical Institute’s cash conversion will fall. Their consensus estimates imply its free cash flow margin of 9.8% for the last 12 months will decrease to 7.2%.
Key Takeaways from Universal Technical Institute’s Q4 Results
We were impressed by how significantly Universal Technical Institute blew past analysts’ EPS expectations this quarter. We were also excited its EBITDA outperformed Wall Street’s estimates by a wide margin. The slight raise in full-year revenue guidance is also a good sign. Zooming out, we think this quarter featured some important positives. The stock traded up 6.4% to $30.25 immediately after reporting.
Universal Technical Institute may have had a good quarter, but does that mean you should invest right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.
