Delaware | 86-0226984 | ||
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
Page | ||
Number | ||
December 31, 2018 | September 30, 2018 | |||||||
Assets | (In thousands) | |||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 58,649 | $ | 58,104 | ||||
Restricted cash | 14,782 | 14,055 | ||||||
Receivables, net | 10,417 | 21,106 | ||||||
Notes receivable, current portion | 5,250 | 5,183 | ||||||
Prepaid expenses | 11,395 | 10,320 | ||||||
Other current assets | 7,821 | 8,027 | ||||||
Total current assets | 108,314 | 116,795 | ||||||
Property and equipment, net | 113,014 | 114,848 | ||||||
Goodwill | 8,222 | 8,222 | ||||||
Notes receivable, less current portion | 31,505 | 31,194 | ||||||
Other assets | 10,108 | 11,219 | ||||||
Total assets | $ | 271,163 | $ | 282,278 | ||||
Liabilities and Shareholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 40,516 | $ | 46,617 | ||||
Dividends payable | 1,323 | — | ||||||
Deferred revenue | 41,374 | 38,236 | ||||||
Accrued tool sets | 2,700 | 2,397 | ||||||
Financing obligation, current portion | 1,376 | 1,319 | ||||||
Other current liabilities | 4,036 | 3,893 | ||||||
Total current liabilities | 91,325 | 92,462 | ||||||
Deferred tax liabilities, net | 329 | 329 | ||||||
Deferred rent liability | 11,545 | 12,003 | ||||||
Financing obligation | 40,348 | 40,715 | ||||||
Other liabilities | 9,435 | 10,124 | ||||||
Total liabilities | 152,982 | 155,633 | ||||||
Commitments and contingencies (Note 11) | ||||||||
Shareholders’ equity: | ||||||||
Common stock, $0.0001 par value, 100,000,000 shares authorized, 32,230,311 shares issued and 25,365,414 shares outstanding as of December 31, 2018 and 32,168,795 shares issued and 25,303,898 shares outstanding as of September 30, 2018 | 3 | 3 | ||||||
Preferred stock, $0.0001 par value, 10,000,000 shares authorized; 700,000 shares of Series A Convertible Preferred Stock issued and outstanding as of December 31, 2018 and September 30, 2018, liquidation preference of $100 per share | — | — | ||||||
Paid-in capital - common | 187,308 | 186,732 | ||||||
Paid-in capital - preferred | 68,853 | 68,853 | ||||||
Treasury stock, at cost, 6,864,897 shares as of December 31, 2018 and September 30, 2018 | (97,388 | ) | (97,388 | ) | ||||
Retained deficit | (40,595 | ) | (31,555 | ) | ||||
Total shareholders’ equity | 118,181 | 126,645 | ||||||
Total liabilities and shareholders’ equity | $ | 271,163 | $ | 282,278 |
Three Months Ended December 31, | ||||||||
2018 | 2017 | |||||||
(In thousands, except per share amounts) | ||||||||
Revenues | $ | 83,050 | $ | 81,156 | ||||
Operating expenses: | ||||||||
Educational services and facilities | 45,735 | 44,081 | ||||||
Selling, general and administrative | 44,520 | 40,679 | ||||||
Total operating expenses | 90,255 | 84,760 | ||||||
Loss from operations | (7,205 | ) | (3,604 | ) | ||||
Other income (expense): | ||||||||
Interest expense, net | (411 | ) | (431 | ) | ||||
Equity in earnings of unconsolidated affiliate | 97 | 97 | ||||||
Other income, net | (65 | ) | (26 | ) | ||||
Total other expense, net | (379 | ) | (360 | ) | ||||
Loss before income taxes | (7,584 | ) | (3,964 | ) | ||||
Income tax expense (benefit) | 133 | (2,829 | ) | |||||
Net loss and comprehensive loss | $ | (7,717 | ) | $ | (1,135 | ) | ||
Preferred stock dividends | 1,323 | 1,323 | ||||||
Loss available for distribution | $ | (9,040 | ) | $ | (2,458 | ) | ||
Loss per share: | ||||||||
Net loss per share - basic | $ | (0.36 | ) | $ | (0.10 | ) | ||
Net loss per share - diluted | $ | (0.36 | ) | $ | (0.10 | ) | ||
Weighted average number of shares outstanding: | ||||||||
Basic | 25,321 | 25,008 | ||||||
Diluted | 25,321 | 25,008 |
Common Stock | Preferred Stock | Paid-in Capital - Common | Paid-in Capital - Preferred | Treasury Stock | Retained Earnings (Deficit) | Total Shareholders’ Equity | |||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||||||||
Balance as of September 30, 2018 | 32,169 | $ | 3 | 700 | $ | — | $ | 186,732 | $ | 68,853 | 6,865 | $ | (97,388 | ) | $ | (31,555 | ) | $ | 126,645 | ||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | (7,717 | ) | (7,717 | ) | |||||||||||||||||||||||||
Issuance of common stock under employee plans | 99 | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Shares withheld for payroll taxes | (38 | ) | — | — | — | (118 | ) | — | — | — | — | (118 | ) | ||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | 694 | — | — | — | — | 694 | |||||||||||||||||||||||||||
Preferred stock dividends | — | — | — | — | — | — | — | — | (1,323 | ) | (1,323 | ) | |||||||||||||||||||||||||
Balance as of December 31, 2018 | 32,230 | $ | 3 | 700 | $ | — | $ | 187,308 | $ | 68,853 | 6,865 | $ | (97,388 | ) | $ | (40,595 | ) | $ | 118,181 |
Three Months Ended December 31, | ||||||||
2018 | 2017 | |||||||
(In thousands) | ||||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (7,717 | ) | $ | (1,135 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization | 3,205 | 3,362 | ||||||
Amortization of assets subject to financing obligation | 670 | 671 | ||||||
Bad debt expense | 337 | 338 | ||||||
Stock-based compensation | 694 | 359 | ||||||
Deferred income taxes | — | (2,812 | ) | |||||
Equity in earnings of unconsolidated affiliate | (97 | ) | (97 | ) | ||||
Training equipment credits earned, net | 78 | (224 | ) | |||||
Other losses | 401 | 11 | ||||||
Changes in assets and liabilities: | ||||||||
Receivables | 6,235 | 5,890 | ||||||
Prepaid expenses and other assets | (1,210 | ) | (1,250 | ) | ||||
Other assets | 720 | — | ||||||
Notes receivable | (378 | ) | (3,043 | ) | ||||
Accounts payable and accrued expenses | (1,578 | ) | (4,952 | ) | ||||
Deferred revenue | 3,138 | 542 | ||||||
Income tax payable/receivable | 169 | (156 | ) | |||||
Accrued tool sets and other current liabilities | 588 | 360 | ||||||
Deferred rent liability | (458 | ) | (553 | ) | ||||
Other liabilities | (387 | ) | 82 | |||||
Net cash provided by (used in) operating activities | 4,410 | (2,607 | ) | |||||
Cash flows from investing activities: | ||||||||
Purchase of property and equipment | (2,779 | ) | (2,556 | ) | ||||
Proceeds from disposal of property and equipment | 5 | 2 | ||||||
Proceeds received upon maturity of investments | — | 947 | ||||||
Purchase of trading securities | — | (894 | ) | |||||
Proceeds from sales of trading securities | — | 40,902 | ||||||
Return of capital contribution from unconsolidated affiliate | 64 | 101 | ||||||
Net cash provided by (used in) investing activities | (2,710 | ) | 38,502 | |||||
Cash flows from financing activities: | ||||||||
Payment of financing obligation | (310 | ) | (259 | ) | ||||
Payment of payroll taxes on stock-based compensation through shares withheld | (118 | ) | (3 | ) | ||||
Net cash used in financing activities | (428 | ) | (262 | ) | ||||
Change in cash, cash equivalents and restricted cash: | ||||||||
Net increase in cash, cash equivalents and restricted cash | 1,272 | 35,633 | ||||||
Cash, cash equivalents and restricted cash, beginning of period | 72,159 | 64,960 | ||||||
Cash, cash equivalents and restricted cash, end of period | $ | 73,431 | $ | 100,593 |
Three Months Ended December 31, | ||||||||
2018 | 2017 | |||||||
(In thousands) | ||||||||
Supplemental disclosure of cash flow information: | ||||||||
(Taxes paid)/refunds received | $ | (148 | ) | $ | 139 | |||
Interest paid | $ | 814 | $ | 835 | ||||
Training equipment obtained in exchange for services | $ | 124 | $ | 418 | ||||
Depreciation of training equipment obtained in exchange for services | $ | 382 | $ | 343 | ||||
Change in accrued capital expenditures during the period | $ | (575 | ) | $ | (399 | ) | ||
Dividends payable | $ | 1,323 | $ | 1,323 |
December 31, 2018 | December 31, 2017 | |||||
(in thousands) | ||||||
Cash and cash equivalents | 58,649 | 86,450 | ||||
Restricted cash | 14,782 | 14,143 | ||||
Total cash, cash equivalents and restricted cash shown in condensed consolidated statements of cash flows | 73,431 | 100,593 |
December 31, 2018 | September 30, 2018 | |||||||
Receivables, which includes Tuition and Notes Receivable | $ | 41,651 | $ | 46,372 | ||||
Contract liabilities | $ | 41,374 | $ | 38,236 |
Fair Value Measurements Using | ||||||||||||||||
December 31, 2018 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
Money market funds | $ | 38,373 | $ | 38,373 | $ | — | $ | — | ||||||||
Notes receivable | 36,755 | — | — | 36,755 | ||||||||||||
Total assets at fair value on a recurring basis | $ | 75,128 | $ | 38,373 | $ | — | $ | 36,755 |
Fair Value Measurements Using | ||||||||||||||||
September 30, 2018 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
Money market funds | $ | 36,387 | $ | 36,387 | $ | — | $ | — | ||||||||
Notes receivable | 36,377 | — | — | 36,377 | ||||||||||||
Total assets at fair value on a recurring basis | $ | 72,764 | $ | 36,387 | $ | — | $ | 36,377 |
Depreciable Lives (in years) | December 31, 2018 | September 30, 2018 | ||||||||
Land | — | $ | 3,189 | $ | 3,189 | |||||
Buildings and building improvements | 30-35 | 81,441 | 81,304 | |||||||
Leasehold improvements | 1-28 | 55,329 | 54,310 | |||||||
Training equipment | 3-10 | 95,805 | 95,795 | |||||||
Office and computer equipment | 3-10 | 36,743 | 36,714 | |||||||
Curriculum development | 5 | 19,692 | 19,692 | |||||||
Software developed for internal use | 1-5 | 12,251 | 12,251 | |||||||
Vehicles | 5 | 1,400 | 1,400 | |||||||
Construction in progress | — | 4,090 | 4,250 | |||||||
309,940 | 308,905 | |||||||||
Less accumulated depreciation and amortization | (196,926 | ) | (194,057 | ) | ||||||
$ | 113,014 | $ | 114,848 |
December 31, 2018 | September 30, 2018 | |||||||
Assets financed by financing obligations, gross | $ | 45,816 | $ | 45,816 | ||||
Less accumulated depreciation and amortization | (12,196 | ) | (11,526 | ) | ||||
Assets financed by financing obligations, net | $ | 33,620 | $ | 34,290 |
December 31, 2018 | September 30, 2018 | |||||||||||||
Carrying Value | Ownership Percentage | Carrying Value | Ownership Percentage | |||||||||||
Investment in JV | $ | 4,239 | 27.972 | % | $ | 4,206 | 27.972 | % |
Three Months Ended December 31, | ||||||||
2018 | 2017 | |||||||
Balance at beginning of period | $ | 4,206 | $ | 4,112 | ||||
Equity in earnings of unconsolidated affiliate | 97 | 97 | ||||||
Return of capital contribution from unconsolidated affiliate | (64 | ) | (101 | ) | ||||
Equity interest in investee's unrealized losses on hedging derivatives, net of taxes | — | — | ||||||
Balance at end of period | $ | 4,239 | $ | 4,108 |
December 31, 2018 | September 30, 2018 | |||||||
Accounts payable | $ | 8,649 | $ | 8,759 | ||||
Accrued compensation and benefits | 20,661 | 22,022 | ||||||
Other accrued expenses | 11,206 | 15,836 | ||||||
$ | 40,516 | $ | 46,617 |
Three Months Ended December 31, | ||||||||
2018 | 2017 | |||||||
Current expense (benefit) | ||||||||
United States federal | $ | (3 | ) | $ | (3 | ) | ||
State | 136 | (14 | ) | |||||
Total current expense (benefit) | 133 | (17 | ) | |||||
Deferred (benefit) expense | ||||||||
United States federal | — | (2,878 | ) | |||||
State | — | 66 | ||||||
Total deferred (benefit) expense | — | (2,812 | ) | |||||
Total provision (benefit) for income taxes | $ | 133 | $ | (2,829 | ) |
Three Months Ended December 31, | ||||||||
2018 | 2017 | |||||||
Income tax expense (benefit) at statutory rate | $ | (1,593 | ) | $ | (971 | ) | ||
State income taxes (benefits), net of federal tax benefit | 107 | (173 | ) | |||||
Change in federal statutory rate | — | — | ||||||
Increase (decrease) in valuation allowance | 1,492 | (1,836 | ) | |||||
Other, net | 127 | 151 | ||||||
Total income tax expense (benefit) | $ | 133 | $ | (2,829 | ) |
December 31, 2018 | September 30, 2018 | |||||||
Gross deferred tax assets: | ||||||||
Deferred compensation | $ | 1,134 | $ | 1,253 | ||||
Reserves and accruals | 4,925 | 4,794 | ||||||
Accrued tool sets | 717 | 638 | ||||||
Deferred revenue | 8,275 | 9,185 | ||||||
Deferred rent liability | 173 | 189 | ||||||
Net operating losses and tax credit carryforwards | 8,147 | 5,389 | ||||||
Depreciation and amortization of property and equipment | 3,624 | 3,740 | ||||||
Charitable contribution carryovers | 804 | 804 | ||||||
Deductions limited by Section 382 | 790 | 700 | ||||||
Valuation allowance | (24,952 | ) | (23,112 | ) | ||||
Total gross deferred tax assets | 3,637 | 3,580 | ||||||
Gross deferred tax liabilities: | ||||||||
Amortization of goodwill and intangibles | (2,056 | ) | (2,056 | ) | ||||
Prepaid and other expenses deductible for tax | (1,910 | ) | (1,853 | ) | ||||
Total gross deferred tax liabilities | (3,966 | ) | (3,909 | ) | ||||
Net deferred tax liabilities | $ | (329 | ) | $ | (329 | ) |
Balance at Beginning of Period | Additions (Reductions) to Income Tax Expense | Write-offs | Balance at End of Period | |||||||||||
$ | 23,112 | $ | 1,833 | $ | 7 | $ | 24,952 |
Three Months Ended December 31, | ||||||||
2018 | 2017 | |||||||
Loss available for distribution | $ | (9,040 | ) | $ | (2,458 | ) | ||
Weighted average number of shares | ||||||||
Basic shares outstanding | 25,321 | 25,008 | ||||||
Dilutive effect related to employee stock plans | — | — | ||||||
Diluted shares outstanding | 25,321 | 25,008 | ||||||
Net loss per share - basic | $ | (0.36 | ) | $ | (0.10 | ) | ||
Net loss per share - diluted | $ | (0.36 | ) | $ | (0.10 | ) |
Three Months Ended December 31, | ||||||
2018 | 2017 | |||||
(In thousands) | ||||||
Outstanding stock-based grants | 307 | 363 | ||||
Convertible preferred stock | 21,021 | 21,021 | ||||
21,328 | 21,384 |
Three Months Ended December 31, | ||||||||
2018 | 2017 | |||||||
Revenues | ||||||||
Postsecondary education | $ | 79,224 | $ | 77,344 | ||||
Other | 3,826 | 3,813 | ||||||
Intersegment eliminations | — | (1 | ) | |||||
Consolidated | $ | 83,050 | $ | 81,156 | ||||
Income (loss) from operations | ||||||||
Postsecondary education | $ | (6,231 | ) | $ | (2,780 | ) | ||
Other | (974 | ) | (824 | ) | ||||
Consolidated | $ | (7,205 | ) | $ | (3,604 | ) | ||
Depreciation and amortization(1) | ||||||||
Postsecondary education | $ | 3,828 | $ | 3,938 | ||||
Other | 47 | 95 | ||||||
Consolidated | $ | 3,875 | $ | 4,033 | ||||
Net loss | ||||||||
Postsecondary education | $ | (6,839 | ) | $ | (440 | ) | ||
Other | (878 | ) | (695 | ) | ||||
Consolidated | $ | (7,717 | ) | $ | (1,135 | ) | ||
December 31, 2018 | September 30, 2018 | |||||||
Goodwill | ||||||||
Postsecondary education | $ | 8,222 | $ | 8,222 | ||||
Other | — | — | ||||||
Consolidated | $ | 8,222 | $ | 8,222 | ||||
Total assets | ||||||||
Postsecondary education | $ | 264,695 | $ | 275,427 | ||||
Other | 6,468 | 6,851 | ||||||
Consolidated | $ | 271,163 | $ | 282,278 |
• | Unemployment; during periods when the unemployment rate declines or remains stable as it has in recent years, prospective students have more employment options; |
• | 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; |
• | Competition for prospective students continues to increase from within our sector and from market employers, as well as with traditional postsecondary educational institutions; 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. |
• | Expanding into new geographic markets either organically or through strategic acquisitions; we opened a new campus in Bloomfield, New Jersey in August 2018; |
• | Offering new programs, such as expanding our welding program to our Dallas Ft. Worth, Texas campus, and offering associate level degree programs at additional campus locations; |
• | Adding and renewing contracts with OEM partners and other employers to provide career opportunities and tuition reimbursement for our graduates; |
• | Identifying and executing on a variety of affordability initiatives, including employer financial support and institutional scholarships and grants; and |
• | Shifting perceptions and building advocacy with key policy makers and influencers. |
Three Months Ended December 31, | ||||||
2018 | 2017 | |||||
Revenues | 100.0 | % | 100.0 | % | ||
Operating expenses: | ||||||
Educational services and facilities | 55.1 | % | 54.3 | % | ||
Selling, general and administrative | 53.6 | % | 50.2 | % | ||
Total operating expenses | 108.7 | % | 104.5 | % | ||
Loss from operations | (8.7 | )% | (4.5 | )% | ||
Interest expense, net | (0.5 | )% | (0.5 | )% | ||
Other income | — | % | 0.1 | % | ||
Total other expense, net | (0.5 | )% | (0.4 | )% | ||
Loss before income taxes | (9.2 | )% | (4.9 | )% | ||
Income tax expense (benefit) | 0.2 | % | (3.5 | )% | ||
Net loss | (9.4 | )% | (1.4 | )% | ||
Preferred stock dividends | 1.6 | % | 1.6 | % | ||
Loss available for distribution | (11.0 | )% | (3.0 | )% |
Three Months Ended December 31, | |||||||
2018 | 2017 | ||||||
(In thousands) | |||||||
Salaries expense | $ | 20,096 | $ | 19,353 | |||
Employee benefits and tax | 3,960 | 3,985 | |||||
Bonus expense | 168 | 174 | |||||
Stock-based compensation | — | — | |||||
Compensation and related costs | 24,224 | 23,512 | |||||
Occupancy costs | 9,027 | 8,787 | |||||
Depreciation and amortization expense | 3,877 | 3,845 | |||||
Other educational services and facilities expense | 8,113 | 7,766 | |||||
Student expenses-housing | 494 | 171 | |||||
$ | 45,735 | $ | 44,081 |
Three Months Ended December 31, | |||||||
2018 | 2017 | ||||||
(In thousands) | |||||||
Salaries expense | $ | 14,911 | $ | 14,683 | |||
Employee benefits and tax | 3,531 | 3,394 | |||||
Bonus expense | 2,662 | 1,588 | |||||
Stock-based compensation | 694 | 359 | |||||
Compensation and related costs | 21,798 | 20,024 | |||||
Advertising expense | 10,583 | 10,611 | |||||
Other selling, general and administrative expenses | 6,006 | 6,158 | |||||
Contract service expense | 5,453 | 2,666 | |||||
Professional accounting services expense | 299 | 689 | |||||
Depreciation and amortization expense | 381 | 531 | |||||
$ | 44,520 | $ | 40,679 |
• | Bonus expense increased by $1.1 million for the three months ended December 31, 2018, primarily as a result of our admissions representatives attaining student metrics and additional expense related to our graduate-based incentive compensation program. |
• | Stock compensation expense increased $0.3 million for the three months ended December 31, 2018, due to higher levels of grants compared to the three months ended December 31, 2017. |
Three Months Ended December 31, | ||||||||
2018 | 2017 | |||||||
(In thousands) | ||||||||
Net loss, as reported | $ | (7,717 | ) | $ | (1,135 | ) | ||
Interest expense, net | 411 | 431 | ||||||
Income tax expense (benefit) | 133 | (2,829 | ) | |||||
Depreciation and amortization(1) | 4,258 | 4,376 | ||||||
EBITDA | (2,915 | ) | 843 |
ISSUER PURCHASES OF EQUITY SECURITIES | ||||||||||||||
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans Or Programs (In thousands) | ||||||||||
Tax Withholdings | ||||||||||||||
October 1-31, 2018 | — | $ | — | — | $ | — | ||||||||
November 1-30, 2018 | — | $ | — | — | $ | — | ||||||||
December 1-31, 2018 | 37,595 | $ | 3.14 | — | $ | — | ||||||||
Total | 37,595 | $ | 3.14 | — | $ | — |
Number | Description | |
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (Filed herewith.) | ||
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (Filed herewith.) | ||
Certification of Chief Executive Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed herewith.) | ||
Certification of Chief Financial Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed herewith.) | ||
101 | Quarterly Report on Form 10-Q for the quarter ended December 31, 2018, formatted in Extensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Loss; (iii) Condensed Consolidated Statements of Comprehensive Loss; (iv) Condensed Consolidated Statement of Shareholders’ Equity; (v) Condensed Consolidated Statements of Cash Flows; and (v) Notes to Condensed Consolidated Financial Statements. |
1. | I have reviewed this Report on Form 10-Q of Universal Technical Institute, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
1. | I have reviewed this Report on Form 10-Q of Universal Technical Institute, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Document and Entity Information - USD ($) |
3 Months Ended | ||
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Dec. 31, 2018 |
Jan. 31, 2019 |
Dec. 31, 2017 |
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Document Documentand Entity Information [Abstract] | |||
Entity Registrant Name | UNIVERSAL TECHNICAL INSTITUTE INC. | ||
Entity Central Index Key | 0001261654 | ||
Current Fiscal Year End Date | --09-30 | ||
Entity Filer Category | Accelerated Filer | ||
Document Type | 10-Q | ||
Document Period End Date | Dec. 31, 2018 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | Q1 | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 25,365,414 | ||
Trading Symbol | UTI | ||
Entity Current Reporting Status | Yes | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Public Float | $ 61,600,000 |
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - $ / shares |
Dec. 31, 2018 |
Sep. 30, 2018 |
---|---|---|
Treasury stock, at cost | 6,864,897 | 6,864,897 |
Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 32,230,311 | 32,168,795 |
Common stock, shares outstanding | 25,365,414 | 25,303,898 |
Series A Preferred Stock | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 700,000 | 700,000 |
Preferred stock, shares outstanding | 700,000 | 700,000 |
Preferred stock, liquidation preference (in dollars per share) | $ 100 | $ 100 |
CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
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Dec. 31, 2018 |
Dec. 31, 2017 |
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Income Statement [Abstract] | ||
Comprehensive loss | $ (7,717) | $ (1,135) |
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED) - 3 months ended Dec. 31, 2018 - USD ($) shares in Thousands, $ in Thousands |
Total |
Common Stock |
Treasury Stock |
Retained Earnings (Deficit) |
Common Stock
Paid-in Capital
|
Series A Preferred Stock |
Series A Preferred Stock
Paid-in Capital
|
---|---|---|---|---|---|---|---|
Beginning Balance, shares at Sep. 30, 2018 | 32,169 | 6,865 | 700 | ||||
Beginning Balance at Sep. 30, 2018 | $ 126,645 | $ 3 | $ (97,388) | $ (31,555) | $ 186,732 | $ 0 | $ 68,853 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net loss | (7,717) | (7,717) | |||||
Issuance of common stock under employee plans, shares | 99 | ||||||
Issuance of common stock under employee plans | 0 | $ 0 | |||||
Shares withheld for payroll taxes, shares | (38) | ||||||
Shares withheld for payroll taxes | (118) | $ 0 | (118) | ||||
Stock-based compensation | 694 | 694 | |||||
Preferred stock dividends | (1,323) | (1,323) | |||||
Ending Balance, shares at Dec. 31, 2018 | 32,230 | 6,865 | 700 | ||||
Ending Balance at Dec. 31, 2018 | $ 118,181 | $ 3 | $ (97,388) | $ (40,595) | $ 187,308 | $ 0 | $ 68,853 |
Nature of the Business |
3 Months Ended |
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Dec. 31, 2018 | |
Nature of the Business [Abstract] | |
Nature of the business | Nature of the Business We are the leading provider of postsecondary education for students seeking careers as professional automotive, diesel, collision repair, motorcycle and marine technicians as well as welders and computer numerical control (CNC) machining technicians as measured by total average undergraduate full-time enrollment and graduates. We offer certificate, diploma or degree programs at 13 campuses across the United States under the banner of several well-known brands, including Universal Technical Institute, Motorcycle Mechanics Institute and Marine Mechanics Institute and NASCAR Technical Institute. We also 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 have provided technical education for 53 years. We work closely with leading original equipment manufacturers (OEMs) and employers to understand their needs for qualified service professionals. Revenues generated from our schools consist primarily of tuition and fees paid by students. To pay for a substantial portion of their tuition, the majority of students rely on funds received from federal financial aid programs under Title IV Programs of the Higher Education Act of 1965 (HEA), as amended, as well as from various veterans benefits programs. For further discussion, see Note 2 "Summary of Significant Accounting Policies - Concentration of Risk" and Note 18 “Government Regulation and Financial Aid” included in our 2018 Annual Report on Form 10-K filed with the SEC on November 30, 2018. |
Basis of Presentation |
3 Months Ended |
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Dec. 31, 2018 | |
Basis of Presentation [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, our condensed consolidated financial statements do not include all the information and footnotes required by GAAP for complete financial statements. Normal and recurring adjustments considered necessary for a fair statement of the results for the interim periods have been included. Operating results for the three months ended December 31, 2018, are not necessarily indicative of the results that may be expected for the year ending September 30, 2019. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2018 Annual Report on Form 10-K filed with the SEC on November 30, 2018. The unaudited condensed consolidated financial statements include the accounts of Universal Technical Institute, Inc. and our wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated. The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates. |
Recent Accounting Pronouncements |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements In January 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. ASU 2017-01 clarifies the definition of a business. If substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, then the acquisition is not a business. In addition, a business must include at least one substantive process. The standard is to be applied on a prospective basis to purchases or disposals of a business or an asset. We adopted ASU 2017-01 as of October 1, 2018. There was no impact to our financial statements or disclosures. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments, which clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows. We adopted ASU 2016-15 as of October 1, 2018. There was no impact on our consolidated statements of cash flows. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230) - Restricted Cash. This guidance requires restricted cash and cash equivalents to be included with cash and cash equivalents on the statement of cash flows. We adopted ASU 2016-18 as of October 1, 2018 using the retrospective method of adjustment. As a result of our adoption of ASU 2016-18, net cash used in operating activities decreased by less than $0.1 million and net cash provided by investing activities decreased by $0.7 million for the three months ended December 31, 2017. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same amounts shown in the condensed consolidated statements of cash flows:
In January 2016, the FASB issued ASU 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 primarily impacts the accounting for equity investments other than those accounted for using the equity method of accounting, financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. Additionally, the FASB clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The accounting for other financial instruments, such as loans, investments in debt securities and financial liabilities is largely unchanged. We adopted ASU 2016-01 as of October 1, 2018. There was no impact to our financial statements or disclosures. In February 2018, the FASB issued ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. ASU 2018-02 amends Accounting Standards Codification (ASC) 220 to allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the "Tax Cuts and Jobs Act" and requires entities to provide certain disclosures regarding stranded tax effects. We adopted ASU 2018-02 as of October 1, 2018. There was no impact to our financial statements or disclosures. Effective the First Quarter of Fiscal 2020: In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize a right-of-use asset and a lease liability on the balance sheet for substantially all leases, with the exception of short-term leases. Leases will be classified as either financing or operating, with classification affecting the pattern of expense recognition in the statement of income. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842) to provide entities with relief from the costs of implementing certain aspects of the new leasing standard. ASU 2018-11 allows entities to elect not to recast the comparative periods presented when transitioning to ASC 842. It also allows lessors to elect not to separate lease and nonlease components when certain conditions are met. We are currently evaluating the impact that the standard will have on our results of operations, financial condition and financial statement disclosures. We do expect this standard to have a material impact on our financial statements. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820). ASU 2018-13 amends the disclosure requirements of ASC 820, changing the fair value measurement disclosure requirements of ASC 820 by adding new disclosure requirements, modifying existing disclosure requirements and eliminating other disclosure requirements. Early adoption is permitted. We are currently evaluating the impact that the standard will have on our financial statement disclosures. In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and other Internal-use Software (Subtopic 350-40). ASU 2018-15 aligns the accounting for costs incurred to implement a cloud computing arrangement (CCA ) that is a service arrangement with the guidance on capitalizing costs associated with developing or obtaining internal-use software. Specifically, the ASU amends ASC 350 to include in its scope implementation costs of a CCA that is a service contract and clarifies that a customer should apply ASC 350-40 to determine which implementation costs should be capitalized in a CCA that is considered a service contract. Early adoption is permitted. The effect of this new standard on our consolidated financial statements will be dependent on our entry into any future cloud computing arrangements. Effective the First Quarter of Fiscal 2021: In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 includes an impairment model (known as the current expected credit loss (CECL) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses (ECL), which the FASB believes will result in more timely recognition of such losses. We are currently evaluating the impact that the update will have on our results of operations, financial condition and financial statement disclosures. |
Revenue from Contracts with Customers |
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Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customers | Revenue from Contracts with Customers Nature of Goods and Services Postsecondary education. 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), which we adopted effective October 1, 2017. Tuition and fee revenue is recognized ratably over the term of the course or program offered. The majority of our core programs are designed to be completed in 33 to 102 weeks, and our advanced training programs range from 12 to 23 weeks in duration. 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. 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. Additionally, certain students participate in a proprietary loan program that extends repayment terms for their tuition. We purchase said loans from the lender, and based on historical collection rates believe a portion of these loans are collectible. Accordingly, we recognize tuition and loan origination fees financed by the loan and any related interest revenue under the effective interest method required under the loan based on the amount we expect to collect, and we recognize these revenues ratably over the term of the course or program offered. Other. We provide dealer technician training or instructor staffing services to manufacturers. Revenues are recognized as transfer of the services occurs. We provide postsecondary education and other services in the same geographical market, the U.S. The impact of economic factors on the nature, amount, timing and uncertainty of revenue and cash flows is consistent among our various postsecondary education programs. See Note 14 for disaggregated segment revenue information. Contract Balances Contract assets primarily relate to the Company’s rights to consideration for work completed in relation to its services performed but not billed at the reporting date. The contract assets are transferred to the receivables when the rights become unconditional. Currently, the Company does not have any contract assets which have not transferred to a receivable. The contract liabilities primarily relate to service contracts where we received payments but we have not yet satisfied the related performance obligations. The advance consideration received from customers for the services is a contract liability until services are provided to the customer. The following table provides information about receivables and contract liabilities from contracts with customers:
During the three months ended December 31, 2018, the contract liabilities balance included decreases for revenues recognized during the period and increases related to new students who started school during the period. Transaction Price Allocated to the Remaining Performance Obligations Tuition and fee revenue is recognized ratably over the term of the course or program offered. The majority of our undergraduate programs are designed to be completed in 33 to 102 weeks, and our advanced training programs range from 12 to 23 weeks in duration. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The accounting framework for determining fair value includes a hierarchy for ranking the quality and reliability of the information used to measure fair value, which enables the reader of the financial statements to assess the inputs used to develop those measurements. The fair value hierarchy consists of three tiers: Level 1, defined as quoted market prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, model-based valuation techniques for which all significant assumptions are observable in the market or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities and Level 3, defined as unobservable inputs that are not corroborated by market data. Any transfers of investments between levels occurs at the end of the reporting period. Assets measured or disclosed at fair value on a recurring basis consisted of the following:
Money market funds are reflected as cash and cash equivalents in our consolidated balance sheets. Notes receivable relate to our proprietary loan program. |
Property and Equipment, net |
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Property and Equipment, net | Property and Equipment, net Property and equipment, net consisted of the following:
The following amounts, which are included in the above table, represent assets financed by financing obligations:
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Goodwill and Intangible Assets |
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Goodwill and Intangible Assets [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill represents the excess of the cost of an acquired business over the estimated fair values of the assets acquired and liabilities assumed. Goodwill is reviewed at least annually for impairment, which may result from the deterioration in the operating performance of the acquired business, adverse market conditions, adverse changes in applicable laws or regulations and a variety of other circumstances. Any resulting impairment charge would be recognized as an expense in the period in which impairment is identified. Our goodwill balance of $8.2 million resulted from the acquisition of our motorcycle and marine education business in 1998 and is allocated to our MMI Orlando, Florida campus that provides the related educational programs. |
Investment in Unconsolidated Affiliate |
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Investment in Unconsolidated Affiliate | Investment in Unconsolidated Affiliate In 2012, we invested $4.0 million to acquire an equity interest of approximately 28% in a joint venture (JV) related to the lease of our Lisle, Illinois campus facility. In connection with this investment, we do not possess a controlling financial interest as we do not hold a majority of the equity interest, nor do we have the power to make major decisions without approval from the other equity member. Therefore, we do not qualify as the primary beneficiary. Accordingly, this investment is accounted for under the equity method of accounting and is included in other assets in our condensed consolidated balance sheets. We recognize our proportionate share of the net income or loss during each accounting period and any return of capital as a change in our investment. Historically, the JV used an interest rate cap to manage interest rate risk associated with its floating rate debt. This derivative instrument was designated as a cash flow hedge based on the nature of the risk being hedged. As such, the effective portion of the gain or loss on the derivative was initially reported as a component of the JV’s accumulated other comprehensive income or loss, net of tax, and was subsequently reclassified into earnings when the hedged transaction affects earnings. Any ineffective portion of the gain or loss was recognized in the JV’s current earnings. Due to our equity method investment in the JV, when the JV reports a current year component of other comprehensive income (OCI), we, as an investor, likewise adjust our investment account for the change in investee equity. In addition, we adjust our OCI for our share of the JV’s currently reported OCI item. During the three months ended December 31, 2017, the JV refinanced the facility loan and discontinued its use of an interest rate cap. Investment in unconsolidated affiliate consisted of the following and is included within other assets on our condensed consolidated balance sheet:
Investment in unconsolidated affiliate included the following activity during the period:
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Accounts Payable and Accrued Expenses |
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Accounts Payable and Accrued Expenses | Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consisted of the following:
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes Each reporting period, we estimate the likelihood that we will be able to recover our deferred tax assets, which represent timing differences in the recognition of revenue and certain tax deductions for accounting and tax purposes. The realization of deferred tax assets is dependent, in part, upon future taxable income. 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. Such valuation allowance is maintained on our deferred tax assets until sufficient positive evidence exists to support its reversal in future periods. The weight given to the positive and negative evidence is commensurate with the extent to which the evidence may be objectively verified. Significant judgment is required to determine if, and the extent to which, valuation allowances should be recorded against deferred tax assets. During the three months ended March 31, 2016, there were several pieces of negative evidence that contributed to our conclusion that a valuation allowance was appropriate against all deferred tax assets that rely upon future taxable income for their realization. As a result of our assessment, we recorded a full valuation allowance during the three months ended March 31, 2016. The amount of the deferred tax assets considered realizable, however, could be adjusted in future periods if estimates of future taxable income during the carryforward period are increased, if objective negative evidence in the form of cumulative losses is no longer present and if additional weight may be given to subjective evidence such as our projections for growth. We continue to have a full valuation allowance as of December 31, 2018 and will continue to evaluate our valuation allowance in future periods for any change in circumstances that causes a change in judgment about the realizability of the deferred tax assets. Tax Cuts and Jobs Act On December 22, 2017, the Tax Cuts and Jobs Act (the Act) was enacted. The Act makes significant changes to U.S. tax laws, including the following that are expected to be impactful to us: lower corporate tax rates; limitations on the amount of net operating losses that can be used to offset income beginning with our fiscal year ending September 30, 2019; the elimination of net operating loss carrybacks and the allowance of indefinite loss carryforwards; and the immediate expensing of short-lived capital investment, such as machinery and equipment. We have adjusted our deferred tax liabilities and deferred tax assets, and the corresponding valuation allowance, for the expected impact of the provisions of the Act. As our net operating losses can now be carried forward indefinitely, our related deferred tax asset can be offset with the deferred tax liability related to goodwill, before a full valuation allowance was applied to the deferred tax asset. As a result of the Act, which was enacted on December 22, 2017, we reversed approximately $2.8 million of the valuation allowance on our deferred tax assets during the three months ended December 31, 2017, as such assets are now offset by the deferred tax liability related to our goodwill before the full valuation allowance was applied to the deferred tax asset. Section 382 Change in Ownership Under Section 382 of the Internal Revenue Code (IRC), for income tax purposes only, we underwent a change in ownership as a result of a preferred stock issuance in June 2016, which is discussed in Note 12. Under the IRC, a change in ownership occurs when a five percent shareholder, as measured by ownership value, increases their ownership in a loss corporation by more than 50 percentage points during the defined testing period; both common and preferred stock are included in the determination of ownership value. Since the purchaser of the preferred stock acquired ownership exceeding 50 percent of our total ownership value, this transaction qualified as a change in ownership under section 382 of the IRC only. Accordingly, certain deductions and losses will be subject to an annual Section 382 limitation. The limitation will affect the timing of when these deductions and losses can be used and may cause us to make income tax payments even if a pre-tax loss is recorded in future periods. The components of income tax expense are as follows:
The income tax provision differs from the tax that would result from application of the statutory federal tax rate of 21.0% to pre-tax loss for the three months ended December 31, 2018 and 24.5% to pre-tax loss for the three months ended December 31, 2017. The reasons for the differences are as follows:
The components of the deferred tax assets (liabilities) recorded in the accompanying condensed consolidated balance sheets were as follows:
The following table summarizes the activity for the valuation allowance for the three months ended December 31, 2018:
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Commitments and Contingencies |
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Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal In the ordinary conduct of our business, we are periodically subject to lawsuits, demands in arbitration, investigations, regulatory proceedings or other claims, including, but not limited to, claims involving current or former students, routine employment matters, business disputes and regulatory demands. When we are aware of a claim or potential claim, we assess the likelihood of any loss or exposure. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, we accrue a liability for the loss. When a loss is not both probable and estimable, we do not accrue a liability. Where a loss is not probable but is reasonably possible, including if a loss in excess of an accrued liability is reasonably possible, we determine whether it is possible to provide an estimate of the amount of the loss or range of possible losses for the claim. Because we cannot predict with certainty the ultimate resolution of the legal proceedings (including lawsuits, investigations, regulatory proceedings or claims) asserted against us, it is not currently possible to provide such an estimate. The 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. Proprietary Loan Program As discussed in Note 4, we have established a private loan program with a bank under which we ultimately purchase the loans originated by the bank. As of December 31, 2018, we had committed to provide loans to our students for approximately $165.1 million since inception in 2008. |
Shareholders' Equity |
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Dec. 31, 2018 | |
Equity [Abstract] | |
Shareholders’ Equity | Shareholders’ Equity Common Stock Holders of our common stock are entitled to receive dividends when and as declared by our Board of Directors and have the right to one vote per share on all matters requiring shareholder approval. 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. Preferred Stock Preferred Stock consists of 10,000,000 authorized preferred shares of $0.0001 par value each. As of December 31, 2018 and September 30, 2018, 700,000 shares of Series A Convertible Preferred Stock (Series A Preferred Stock) were issued and outstanding. The liquidation preference associated with the Series A Preferred Stock was $100 per share at December 31, 2018. Pursuant to the terms of the Securities Purchase Agreement, we may pay a cash dividend on each share of the Series A Preferred Stock at a rate of 7.5% per year on the liquidation preference then in effect (Cash Dividend). If we do not pay a Cash Dividend, the liquidation preference shall be increased to an amount equal to the current liquidation preference in effect plus an amount reflecting that liquidation preference multiplied by the Cash Dividend rate then in effect plus 2.0% per year (Accrued Dividend). Cash Dividends are payable semi-annually in arrears on September 30 and March 31 of each year, and begin to accrue on the first day of the applicable dividend period. We accrued Cash Dividends of $1.3 million as of December 31, 2018. Share Repurchase Program On December 20, 2011, our Board of Directors authorized the repurchase of up to $25.0 million of our common stock in the open market or through privately negotiated transactions. The timing and actual number of shares purchased will depend on a variety of factors such as price, corporate and regulatory requirements and prevailing market conditions. We may terminate or limit the share repurchase program at any time without prior notice. We did not repurchase shares during the three months ended December 31, 2018. As of December 31, 2018, we have purchased 1,677,570 shares at an average price per share of $9.09 and a total cost of approximately $15.3 million under this program. Under the terms of the Securities Purchase Agreement, future stock purchases under this program require the approval of a majority of the voting power of the Series A Preferred Stock. |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per Share | Earnings per Share Basic net income (loss) per share has historically been calculated by dividing net income (loss) attributable to common stock by the weighted average number of common shares outstanding for the period. 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. As such, for periods subsequent to the issuance of the Series A Preferred Stock, which occurred on June 24, 2016, we calculated basic earnings per share pursuant to the two-class method. 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 Series A Preferred Stock is not included in the computation of basic income (loss) per share in periods in which we have a net loss, as the Series A Preferred Stock is not contractually obligated to share in our net losses. Accordingly, the two-class method was not applicable for the three months ended December 31, 2018 and 2017. Diluted net income per share is calculated using the more dilutive of the as-converted or the two-class method. The two-class method assumes conversion of all potential shares other than the participating securities. Dilutive potential common shares include outstanding stock options, unvested restricted share awards and units and convertible preferred stock. The basic and diluted net loss amounts are the same for the three months ended December 31, 2018 and 2017 as a result of the net loss and anti-dilutive impact of the potentially dilutive securities. The following table summarizes the computation of basic and diluted loss per share under the as-converted method:
The following table summarizes the potential weighted average shares of common stock that were excluded from the determination of our diluted shares outstanding as they were anti-dilutive:
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Segment Information |
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Segment Information | Segment Information Our principal business is providing postsecondary education. We also provide manufacturer-specific training and these operations are managed separately from our campus operations. These operations do not currently meet the quantitative criteria for segments and therefore are reflected in the Other category. Our equity method investment and other non-Postsecondary Education operations are also included within the Other category. Corporate expenses are allocated to Postsecondary Education and the Other category based on compensation expense. Depreciation and amortization includes amortization of assets subject to a financing obligation. Summary information by reportable segment is as follows:
(1) Excludes depreciation of training equipment obtained in exchange for services of $0.4 million and $0.3 million for the three months ended December 31, 2018 and December 31, 2017, respectively. |
Government Regulation and Financial Aid |
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Dec. 31, 2018 | |
Government Regulation and Financial Aid [Abstract] | |
Government Regulation And Financial Aid | Government Regulation and Financial Aid Accreditation In July 2018, the Accrediting Commission of Career Schools (ACCSC) conducted a renewal of accreditation on-site evaluation at NASCAR Technical Institute, which resulted in zero findings. The campus will be considered for reaccreditation at the February 2019 Commission meeting. In August 2018, ACCSC conducted a renewal of accreditation on-site evaluation at our Orlando, Florida campus. We have yet to receive the Team Summary Report indicating any findings from the evaluation. We anticipate receipt of the Team Summary Report in February 2019. In September 2018, ACCSC conducted a renewal of accreditation on-site evaluation at our Houston, Texas campus, which resulted in one finding of non-compliance. The Houston, Texas campus reported student and graduation and employment rates that did not meet the ACCSC minimum benchmarks for the Collision Repair & Refinish Technology program and Core Collision Repair & Refinish Technology with Estimating. The campus has since discontinued the Core Collision Repair & Refinish Technology with Estimating program and the Collision Repair & Refinish Technology is now above the established benchmarks. The campus will be considered for reaccreditation at the May 2019 Commission meeting. In December 2018, ACCSC conducted a renewal of accreditation on-site evaluation at our Lisle, Illinois campus, which resulted in zero findings. The campus will be considered for reaccreditation at the May 2019 Commission meeting. Regulation of Federal Student Financial Aid Programs Accreditation & Academic Definitions. On October 15, 2018, the U.S. Department of Education (ED) published a notice in the Federal Register announcing its intent to establish a negotiated rulemaking committee and three subcommittees to develop proposed regulations related to several matters, including, but not limited to, requirements for accrediting agencies in their oversight of member institutions and programs; criteria used by ED to recognize accrediting agencies; simplification of ED’s recognition and review of accrediting agencies; clarification of the core oversight responsibilities amongst accrediting agencies, states and ED; clarification of the permissible arrangements between an institution of higher education and another organization to provide a portion of an educational program; roles and responsibilities of institutions and accrediting agencies in the teach-out process; regulatory changes required to ensure equitable treatment of brick-and-mortar and distance education programs; regulatory changes required to enable expansion of direct assessment programs, distance education, and competency-based education; regulatory changes required to clarify disclosure and other requirements of state authorization; emphasizing the importance of institutional mission in evaluating its policies, programs and outcomes; simplification of state authorization requirements related to distance education; defining “regular and substantive interaction” as it relates to distance education and correspondence courses; defining the term “credit hour;” defining the requirements related to the length of educational programs and entry level requirements for the occupation; and other matters. On January 7, 2019, ED released a set of draft proposed regulations for consideration and negotiation by the negotiated rulemaking committee and subcommittees. The draft proposed regulations also cover additional topics including, but not limited to, amendments to current regulations regarding the clock to credit hour conversion formula for measuring the lengths of certain educational programs, the return of unearned Title IV funds received for students who withdraw before completing their educational programs, and the measurement of student academic progress. The proposed changes to the regulations remain subject to further change during the negotiated rulemaking process and we continue to monitor and review those proposals as they evolve. The committee and subcommittees are scheduled to meet during the first three months of 2019. At this time, we cannot provide any assurances as to the timing, content or impact of any final regulations arising from this planned negotiated rulemaking process. Compliance with Regulatory Standards and Effect of Regulatory Violations. As described in our 2018 Annual Report on Form 10-K filed with the SEC on November 30, 2018, in connection with the issuance of our Series A Preferred Stock, effective July 2016 ED requested the submission of bi-weekly cash flow projection reports and a monthly student roster. On February 28, 2018, ED notified us that the cash flow projection reports would be required on a monthly basis instead of the previously requested bi-weekly basis. This special reporting will continue until we are otherwise notified by ED. |
Recent Accounting Pronouncements (Policies) |
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Recently Issued Accounting Pronouncements | Recently Adopted Accounting Pronouncements In January 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. ASU 2017-01 clarifies the definition of a business. If substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, then the acquisition is not a business. In addition, a business must include at least one substantive process. The standard is to be applied on a prospective basis to purchases or disposals of a business or an asset. We adopted ASU 2017-01 as of October 1, 2018. There was no impact to our financial statements or disclosures. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments, which clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows. We adopted ASU 2016-15 as of October 1, 2018. There was no impact on our consolidated statements of cash flows. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230) - Restricted Cash. This guidance requires restricted cash and cash equivalents to be included with cash and cash equivalents on the statement of cash flows. We adopted ASU 2016-18 as of October 1, 2018 using the retrospective method of adjustment. As a result of our adoption of ASU 2016-18, net cash used in operating activities decreased by less than $0.1 million and net cash provided by investing activities decreased by $0.7 million for the three months ended December 31, 2017. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same amounts shown in the condensed consolidated statements of cash flows:
In January 2016, the FASB issued ASU 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 primarily impacts the accounting for equity investments other than those accounted for using the equity method of accounting, financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. Additionally, the FASB clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The accounting for other financial instruments, such as loans, investments in debt securities and financial liabilities is largely unchanged. We adopted ASU 2016-01 as of October 1, 2018. There was no impact to our financial statements or disclosures. In February 2018, the FASB issued ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. ASU 2018-02 amends Accounting Standards Codification (ASC) 220 to allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the "Tax Cuts and Jobs Act" and requires entities to provide certain disclosures regarding stranded tax effects. We adopted ASU 2018-02 as of October 1, 2018. There was no impact to our financial statements or disclosures. Effective the First Quarter of Fiscal 2020: In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize a right-of-use asset and a lease liability on the balance sheet for substantially all leases, with the exception of short-term leases. Leases will be classified as either financing or operating, with classification affecting the pattern of expense recognition in the statement of income. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842) to provide entities with relief from the costs of implementing certain aspects of the new leasing standard. ASU 2018-11 allows entities to elect not to recast the comparative periods presented when transitioning to ASC 842. It also allows lessors to elect not to separate lease and nonlease components when certain conditions are met. We are currently evaluating the impact that the standard will have on our results of operations, financial condition and financial statement disclosures. We do expect this standard to have a material impact on our financial statements. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820). ASU 2018-13 amends the disclosure requirements of ASC 820, changing the fair value measurement disclosure requirements of ASC 820 by adding new disclosure requirements, modifying existing disclosure requirements and eliminating other disclosure requirements. Early adoption is permitted. We are currently evaluating the impact that the standard will have on our financial statement disclosures. In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and other Internal-use Software (Subtopic 350-40). ASU 2018-15 aligns the accounting for costs incurred to implement a cloud computing arrangement (CCA ) that is a service arrangement with the guidance on capitalizing costs associated with developing or obtaining internal-use software. Specifically, the ASU amends ASC 350 to include in its scope implementation costs of a CCA that is a service contract and clarifies that a customer should apply ASC 350-40 to determine which implementation costs should be capitalized in a CCA that is considered a service contract. Early adoption is permitted. The effect of this new standard on our consolidated financial statements will be dependent on our entry into any future cloud computing arrangements. Effective the First Quarter of Fiscal 2021: In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 includes an impairment model (known as the current expected credit loss (CECL) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses (ECL), which the FASB believes will result in more timely recognition of such losses. We are currently evaluating the impact that the update will have on our results of operations, financial condition and financial statement disclosures. |
Revenue from Contracts with Customers (Policies) |
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Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition Policy | Nature of Goods and Services Postsecondary education. 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), which we adopted effective October 1, 2017. Tuition and fee revenue is recognized ratably over the term of the course or program offered. The majority of our core programs are designed to be completed in 33 to 102 weeks, and our advanced training programs range from 12 to 23 weeks in duration. 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. 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. Additionally, certain students participate in a proprietary loan program that extends repayment terms for their tuition. We purchase said loans from the lender, and based on historical collection rates believe a portion of these loans are collectible. Accordingly, we recognize tuition and loan origination fees financed by the loan and any related interest revenue under the effective interest method required under the loan based on the amount we expect to collect, and we recognize these revenues ratably over the term of the course or program offered. Other. We provide dealer technician training or instructor staffing services to manufacturers. Revenues are recognized as transfer of the services occurs. We provide postsecondary education and other services in the same geographical market, the U.S. The impact of economic factors on the nature, amount, timing and uncertainty of revenue and cash flows is consistent among our various postsecondary education programs. See Note 14 for disaggregated segment revenue information. Contract Balances Contract assets primarily relate to the Company’s rights to consideration for work completed in relation to its services performed but not billed at the reporting date. The contract assets are transferred to the receivables when the rights become unconditional. Currently, the Company does not have any contract assets which have not transferred to a receivable. The contract liabilities primarily relate to service contracts where we received payments but we have not yet satisfied the related performance obligations. The advance consideration received from customers for the services is a contract liability until services are provided to the customer. |
Recent Accounting Pronouncements Schedule of cash, cash equivalents and restricted cash (Tables) |
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Cash, Cash Equivalents and Restricted Cash | The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same amounts shown in the condensed consolidated statements of cash flows:
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Revenue from Contracts with Customers (Tables) |
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Contract with Customer, Asset and Liability | The following table provides information about receivables and contract liabilities from contracts with customers:
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Fair Value Measurements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Fair Value of Our Trading Securities, Money Market Funds, Notes Receivable and Corporate Bonds | Assets measured or disclosed at fair value on a recurring basis consisted of the following:
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Property and Equipment, net (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and equipment, net | Property and equipment, net consisted of the following:
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Assets financed by financing obligations | The following amounts, which are included in the above table, represent assets financed by financing obligations:
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Investment in Unconsolidated Affiliate (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment in Unconsolidated Affiliate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investment | Investment in unconsolidated affiliate consisted of the following and is included within other assets on our condensed consolidated balance sheet:
Investment in unconsolidated affiliate included the following activity during the period:
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Accounts Payable and Accrued Expenses (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts payable and accrued expenses | Accounts payable and accrued expenses consisted of the following:
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Income Taxes (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Income Tax Expense (Benefit) | The components of income tax expense are as follows:
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Schedule of Effective Income Tax Rate Reconciliation | The income tax provision differs from the tax that would result from application of the statutory federal tax rate of 21.0% to pre-tax loss for the three months ended December 31, 2018 and 24.5% to pre-tax loss for the three months ended December 31, 2017. The reasons for the differences are as follows:
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Schedule of Deferred Tax Assets and Liabilities | The components of the deferred tax assets (liabilities) recorded in the accompanying condensed consolidated balance sheets were as follows:
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Schedule of Valuation and Qualifying Accounts Disclosure | The following table summarizes the activity for the valuation allowance for the three months ended December 31, 2018:
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Earnings per Share (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following table summarizes the potential weighted average shares of common stock that were excluded from the determination of our diluted shares outstanding as they were anti-dilutive:
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Summary of Calculation of Weighted Average Number of Shares Outstanding Used in Computing Basic and Diluted Net Income Loss Per Share | The following table summarizes the computation of basic and diluted loss per share under the as-converted method:
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Segment Information (Tables) |
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Information by Reportable Segment | Summary information by reportable segment is as follows:
(1) Excludes depreciation of training equipment obtained in exchange for services of $0.4 million and $0.3 million for the three months ended December 31, 2018 and December 31, 2017, respectively. |
Nature of the Business (Narrative) (Details) |
Dec. 31, 2018
Campus
|
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of campuses through which undergraduate degree, diploma and certificate programs are offered | 13 |
Recent Accounting Pronouncements ASU 2016-18 Transition (Details) - Accounting Standards Update 2016-18 $ in Millions |
3 Months Ended |
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Dec. 31, 2017
USD ($)
| |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Decrease net cash used in operating activities (less than) | $ 0.1 |
Decrease net cash provided by investing activities | $ 0.7 |
Recent Accounting Pronouncements Reconciliation (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Sep. 30, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
---|---|---|---|---|
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 58,649 | $ 58,104 | $ 86,450 | |
Restricted cash | 14,782 | 14,143 | ||
Total cash, cash equivalents and restricted cash shown in condensed consolidated statements of cash flows | $ 73,431 | $ 72,159 | $ 100,593 | $ 64,960 |
Revenue from Contracts with Customers (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Sep. 30, 2018 |
---|---|---|
Revenue from Contract with Customer [Abstract] | ||
Receivables, which includes Tuition and Notes Receivable | $ 41,651 | $ 46,372 |
Contract liabilities | $ 41,374 | $ 38,236 |
Property and Equipment, net Assets Financed by Financing Obligations (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Sep. 30, 2018 |
---|---|---|
Assets financed by financing obligations [Line Items] | ||
Less accumulated depreciation and amortization | $ (12,196) | $ (11,526) |
Assets financed by financing obligations, net | 33,620 | 34,290 |
Buildings and building improvements | ||
Assets financed by financing obligations [Line Items] | ||
Assets financed by financing obligations, gross | $ 45,816 | $ 45,816 |
Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Sep. 30, 2018 |
---|---|---|
Goodwill [Line Items] | ||
Goodwill | $ 8,222 | $ 8,222 |
Orlando, Florida campus | ||
Goodwill [Line Items] | ||
Goodwill | $ 8,200 |
Investment in Unconsolidated Affiliate Narrative (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Sep. 30, 2018 |
Dec. 31, 2017 |
Sep. 30, 2016 |
Sep. 30, 2012 |
---|---|---|---|---|---|
Schedule of Equity Method Investments [Line Items] | |||||
Investment in Unconsolidated Affiliate | $ 4,239 | $ 4,206 | $ 4,108 | $ 4,112 | $ 4,000 |
Investment in Unconsolidated Affiliate, Ownership Percentage | 28.00% | ||||
Investment in JV | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Investment in Unconsolidated Affiliate | $ 4,239 | $ 4,206 | |||
Investment in Unconsolidated Affiliate, Ownership Percentage | 27.972% | 27.972% |
Investment in Unconsolidated Affiliate (Details) - USD ($) $ in Thousands |
3 Months Ended | ||||
---|---|---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2018 |
Sep. 30, 2016 |
Sep. 30, 2012 |
|
Schedule of Equity Method Investments [Line Items] | |||||
Investment in Unconsolidated Affiliate | $ 4,239 | $ 4,108 | $ 4,206 | $ 4,112 | $ 4,000 |
Investment in Unconsolidated Affiliate, Ownership Percentage | 28.00% | ||||
Equity in earnings of unconsolidated affiliate | 97 | 97 | |||
Return of capital contribution from unconsolidated affiliate | (64) | (101) | |||
Equity interest in investee's unrealized loss on hedging derivatives, net of taxes | 0 | $ 0 | |||
Investment in JV | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Investment in Unconsolidated Affiliate | $ 4,239 | $ 4,206 | |||
Investment in Unconsolidated Affiliate, Ownership Percentage | 27.972% | 27.972% |
Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Sep. 30, 2018 |
---|---|---|
Payables and Accruals [Abstract] | ||
Accounts payable | $ 8,649 | $ 8,759 |
Accrued compensation and benefits | 20,661 | 22,022 |
Other accrued expenses | 11,206 | 15,836 |
Accounts payable and accrued expenses, total | $ 40,516 | $ 46,617 |
Income Taxes Components of Income Tax Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Components of income tax expense [Line Items] | ||
Current expense (benefit) | $ 133 | $ (17) |
Deferred (benefit) expense | 0 | (2,812) |
Total provision (benefit) for income taxes | 133 | (2,829) |
United States federal | ||
Components of income tax expense [Line Items] | ||
Current expense (benefit) | 25 | (3) |
Deferred (benefit) expense | 0 | (2,878) |
State | ||
Components of income tax expense [Line Items] | ||
Current expense (benefit) | 108 | (14) |
Deferred (benefit) expense | $ 0 | $ 66 |
Income Taxes Reconciliation of Tax Rate (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Income Tax Disclosure [Abstract] | ||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | 24.50% |
Income tax expense at statutory rate | $ (1,593) | $ (971) |
State income taxes (benefits), net of federal tax benefit | 107 | (173) |
Current and deferred tax rate difference | 0 | 0 |
Increase in valuation allowance | 1,492 | (1,836) |
Other, net | 127 | 151 |
Income tax expense (benefit) | $ 133 | $ (2,829) |
Income Taxes Components of Deferred Tax Assets (Liabilities) (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Sep. 30, 2018 |
---|---|---|
Income Tax Disclosure [Abstract] | ||
Deferred compensation | $ 1,134 | $ 1,253 |
Reserves and accruals | 4,925 | 4,794 |
Accrued tool sets | 717 | 638 |
Deferred revenue | 8,275 | 9,185 |
Deferred rent liability | 173 | 189 |
Net operating losses and tax credit carryforwards | 8,147 | 5,389 |
Depreciation and amortization of property and equipment | 3,624 | 3,740 |
Charitable contribution carryovers | 804 | 804 |
Deductions limited by Section 382 | 790 | 700 |
Valuation allowance | (24,952) | (23,112) |
Total gross deferred tax assets | 3,637 | 3,580 |
Amortization of goodwill and intangibles | (2,056) | (2,056) |
Prepaid and other expenses deductible for tax | (1,910) | (1,853) |
Total gross deferred tax liabilities | (3,966) | (3,909) |
Net deferred tax liabilities | $ (329) | $ (329) |
Income Taxes Summary of Valuation Allowance (Details) $ in Thousands |
3 Months Ended |
---|---|
Dec. 31, 2018
USD ($)
| |
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |
Balance at Beginning of Period | $ 23,112 |
Additions (Reductions) to Income Tax Expense | 1,833 |
Write-offs | (7) |
Balance at End of Period | 24,952 |
SEC Schedule, 12-09, Valuation Allowance, Tax Credit Carryforward | |
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |
Write-offs | $ 2,800 |
Commitments and Contingencies (Narrative) (Details) |
Dec. 31, 2018
USD ($)
|
---|---|
Commitments and Contingencies (Textual) [Abstract] | |
Amount Of Loans Committed To Provide | $ 165.1 |
Shareholders' Equity - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 84 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2018 |
Sep. 30, 2018 |
Dec. 20, 2011 |
|
Stockholders Equity Note [Line Items] | ||||
Common stock, voting rights | 1 | |||
Document period end date | Dec. 31, 2018 | |||
Preferred stock issuance costs accrued | $ 1.3 | |||
Repurchase of common stock authorized by Board of Directors | $ 25.0 | |||
Purchased shares | 1,677,570 | |||
Average price per share | $ 9.09 | |||
Aggregate cost of treasury stock repurchased during the period | $ 15.3 | |||
Series A Preferred Stock | ||||
Stockholders Equity Note [Line Items] | ||||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | 10,000,000 | |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | $ 0.0001 | |
Preferred stock, shares issued | 700,000 | 700,000 | 700,000 | |
Preferred stock, liquidation preference (in dollars per share) | $ 100 | $ 100 | $ 100 | |
Preferred stock, dividend rate, percentage | 7.50% | |||
Preferred stock, dividend payment rate, variable | If we do not pay a Cash Dividend, the liquidation preference shall be increased to an amount equal to the current liquidation preference in effect plus an amount reflecting that liquidation preference multiplied by the Cash Dividend rate then in effect plus 2.0% per year (Accrued Dividend). |
Earnings per Share (Calculation of the Weighted Average Number of Shares Outstanding) (Details) - shares shares in Thousands |
3 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Weighted average number of shares | ||
Basic | 25,321 | 25,008 |
Dilutive effect related to employee stock plans | 0 | 0 |
Diluted | 25,321 | 25,008 |
Earnings per Share Calculation of earnings per share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Earnings Per Share [Abstract] | ||
Loss available for distribution | $ (9,040) | $ (2,458) |
Weighted Average Number of Shares Outstanding, Basic | 25,321 | 25,008 |
Dilutive effect related to employee stock plans | 0 | 0 |
Weighted Average Number of Shares Outstanding, Diluted | 25,321 | 25,008 |
Net loss per share - basic (in dollars per share) | $ (0.36) | $ (0.10) |
Net loss per share - diluted (in dollars per share) | $ (0.36) | $ (0.10) |
Earnings per Share Schedule of antidilutive securities (Details) - shares |
3 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 21,328,000 | 21,384,000 |
Restricted Stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 307,000 | 363,000 |
Convertible Preferred Stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 21,021,000 | 21,021,000 |
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