__________________________________________________________________________________________________________

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☑    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

For the transition period from _____ to ______

Commission File Number: 1-31923

 UNIVERSAL TECHNICAL INSTITUTE, INC.

(Exact name of registrant as specified in its charter)

Delaware	86-0226984
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

4225 East Windrose Drive, Suite 200

Phoenix, Arizona 85032

(Address of principal executive offices, including zip code)

(623) 445-9500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.0001 par value	UTI	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes þ    No  ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes   þ    No ¨  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨	Accelerated filer þ
Non-accelerated filer ¨	Smaller reporting company ☐
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  þ

At August 1, 2023, there were 34,069,210 shares outstanding of the registrant's common stock.

UNIVERSAL TECHNICAL INSTITUTE, INC.

INDEX TO FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2023

 

		Page
		Number
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		ii
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets at June 30, 2023 and September 30, 2022 (Unaudited)	1
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended June 30, 2023 and 2022 (Unaudited)	2
	Condensed Consolidated Statements of Other Comprehensive Income for the Three and Nine Months Ended June 30, 2023 and 2022 (Unaudited)	3
	Condensed Consolidated Statements of Shareholders’ Equity as of June 30, 2023 and 2022 (Unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended June 30, 2023 and 2022 (Unaudited)	6
	Notes to Condensed Consolidated Financial Statements (Unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48
Item 4.	Controls and Procedures	48
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	50
Item 1A.	Risk Factors	50
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50
Item 3.	Defaults upon Senior Securities	50
Item 4.	Mine Safety Disclosures	50
Item 5.	Other Information	50
Item 6.	Exhibits	50
SIGNATURES		52

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

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

•failure of our schools to comply with the extensive regulatory requirements for school operations;

•our failure to maintain eligibility for federal student financial assistance funds;

•continued Congressional examination of the for-profit education sector;

•our failure to maintain eligibility for or the ability to process federal student financial assistance;

•regulatory investigations of, or actions commenced against, us or other companies in our industry;

•changes in the state regulatory environment or budgetary constraints;

•our failure to execute on our growth and diversification strategy;

•our failure to realize the expected benefits of our acquisitions, including, without limitation, Concorde Career Colleges, Inc.;

•our failure to successfully integrate our acquisitions, including, without limitation, Concorde Career Colleges, Inc.;

•our failure to improve underutilized capacity at certain of our campuses;

•enrollment declines or challenges in our students’ ability to find employment as a result of macroeconomic conditions;

•our failure to maintain and expand existing industry relationships and develop new industry relationships;

•our ability to update and expand the content of existing programs and develop and integrate new programs in a timely and cost-effective manner while maintaining positive student outcomes;

•our failure to effectively identify, establish and operate additional schools, programs or campuses;

•the effect of our principal stockholder owning a significant percentage of our capital stock, and thus being able to influence certain corporate matters and the potential in the future to gain substantial control over our company;

•the impact of certain holders of our Series A Preferred Stock owning a significant percentage of our capital stock, their ability to influence and control certain corporate matters and the potential for future dilution to holders of our common stock;

•a loss of our senior management or other key employees;

•the effect of public health pandemics, epidemics or outbreak, including COVID-19; and

•risks related to other factors discussed in our 2022 Annual Report on Form 10-K filed with the SEC on December 12, 2022 (the “2022 Annual Report on Form 10-K”).

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

ii

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

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

iii

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value and per share amounts)

(Unaudited)

	June 30, 2023		September 30, 2022
Assets
Cash and cash equivalents	$	110,511	$	66,452
Restricted cash	3,572		3,544
Held-to-maturity investments	—		28,918
Receivables, net	25,156		16,450
Notes receivable, current portion	5,964		5,641
Prepaid expenses	11,153		6,139
Other current assets	8,123		8,809
Total current assets	164,479		135,953
Property and equipment, net	266,238		214,292
Goodwill	28,459		16,859
Intangible assets, net	19,148		14,215
Notes receivable, less current portion	29,930		30,231
Right-of-use assets for operating leases	182,111		132,038
Deferred tax asset, net	5,231		3,365
Other assets	11,140		5,958
Total assets	$	706,736	$	552,911
Liabilities and Shareholders’ Equity
Accounts payable and accrued expenses	$	64,898	$	66,680
Dividends payable	1,263		—
Deferred revenue	57,484		54,223
Operating lease liability, current portion	21,290		12,959
Long-term debt, current portion	2,478		1,115
Other current liabilities	3,522		2,745
Total current liabilities	150,935		137,722
Operating lease liability	170,886		129,302
Long-term debt	160,225		66,423
Other liabilities	4,562		4,067
Total liabilities	486,608		337,514
Commitments and contingencies (Note 16)
Shareholders’ equity:
Common stock, $0.0001 par value, 100,000 shares authorized, 34,151 and 33,857 shares issued	3		3
Preferred stock, $0.0001 par value, 10,000 shares authorized; 676 shares of Series A Convertible Preferred Stock issued and outstanding, liquidation preference of $100 per share	—		—
Paid-in capital - common	151,426		148,372
Paid-in capital - preferred	66,481		66,481
Treasury stock, at cost, 82 shares	(365)		(365)
Retained earnings (deficit)	521		(1,307)
Accumulated other comprehensive income	2,062		2,213
Total shareholders’ equity	220,128		215,397
Total liabilities and shareholders’ equity	$	706,736	$	552,911

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

1

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Revenues	$	153,286	$	100,966	$	437,110	$	308,127
Operating expenses:
Educational services and facilities	88,377		53,216		236,715		150,326
Selling, general and administrative	64,246		45,796		189,335		138,892
Total operating expenses	152,623		99,012		426,050		289,218
Income from operations	663		1,954		11,060		18,909
Other (expense) income:
Interest income	1,632		68		4,260		88
Interest expense	(2,957)		(552)		(7,017)		(1,251)
Other income (expense), net	89		(291)		540		(336)
Total other expense, net	(1,236)		(775)		(2,217)		(1,499)
(Loss) income before income taxes	(573)		1,179		8,843		17,410
Income tax benefit (expense) (See Note 15)	64		(336)		(3,224)		5,609
Net (loss) income	$	(509)	$	843	$	5,619	$	23,019
Preferred stock dividends	(1,263)		(1,296)		(3,791)		(3,913)
(Loss) income available for distribution	$	(1,772)	$	(453)	$	1,828	$	19,106
Income allocated to participating securities	—		—		(684)		(7,272)
Net (loss) income available to common shareholders	$	(1,772)	$	(453)	$	1,144	$	11,834
Earnings per share (See Note 18):
Net (loss) income per share - basic	$	(0.05)	$	(0.01)	$	0.03	$	0.36
Net (loss) income per share - diluted	$	(0.05)	$	(0.01)	$	0.03	$	0.35
Weighted average number of shares outstanding:
Basic	34,067		33,257		33,956		33,032
Diluted	34,067		33,257		34,402		33,550

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

2

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Net (loss) income	$	(509)	$	843	$	5,619	$	23,019
Other comprehensive income (loss):
Unrealized gain (loss) on interest rate swaps, net of taxes	513		334		(151)		1,368
Comprehensive income	$	4	$	1,177	$	5,468	$	24,387

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

3

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands)

(Unaudited)

	Common Stock			Preferred Stock			Paid-in Capital - Common		Paid-in Capital - Preferred		Treasury Stock			Retained Earnings (Deficit)		Accumulated Other Comprehensive Income		Total Shareholders’ Equity
	Shares	Amount		Shares	Amount						Shares	Amount
Balance as of September 30, 2022	33,857	$	3	676	$	—	$	148,372	$	66,481	(82)	$	(365)	$	(1,307)	$	2,213	$	215,397
Net income	—	—		—	—		—		—		—	—		2,648		—		2,648
Issuance of common stock under employee plans	223	—		—	—		—		—		—	—		—		—		—
Shares withheld for payroll taxes	(73)	—		—	—		(525)		—		—	—		—		—		(525)
Stock-based compensation	—	—		—	—		1,169		—		—	—		—		—		1,169
Preferred stock dividends	—	—		—	—		—		—		—	—		(1,277)		—		(1,277)
Unrealized loss on interest rate swaps, net of taxes	—	—		—	—		—		—		—	—		—		(126)		(126)
Balance as of December 31, 2022	34,007	$	3	676	$	—	$	149,016	$	66,481	(82)	$	(365)	$	64	$	2,087	$	217,286
Net income	—	—		—	—		—		—		—	—		3,480		—		3,480
Issuance of common stock under employee plans	175	—		—	—		—		—		—	—		—		—		—
Shares withheld for payroll taxes	(33)	—		—	—		(223)		—		—	—		—		—		(223)
Stock-based compensation	—	—		—	—		2,113		—		—	—		—		—		2,113
Preferred stock dividends	—	—		—	—		—		—		—	—		(1,251)		—		(1,251)
Unrealized loss on interest rate swaps, net of taxes	—	—		—	—		—		—		—	—		—		(538)		(538)
Balance as of March 31, 2023	34,149	$	3	676	$	—	$	150,906	$	66,481	(82)	$	(365)	$	2,293	$	1,549	$	220,867
Net loss	—	—		—	—		—		—		—	—		(509)		—		(509)
Issuance of common stock under employee plans	4	—		—	—		—		—		—	—		—		—		—
Shares withheld for payroll taxes	(2)	—		—	—		(13)		—		—	—		—		—		(13)
Stock-based compensation	—	—		—	—		533		—		—	—		—		—		533
Preferred stock dividends	—	—		—	—		—		—		—	—		(1,263)		—		(1,263)
Unrealized gain on interest rate swap, net of taxes	—	—		—	—		—		—		—	—		—		513		513
Balance as of June 30, 2023	34,151	$	3	676	$	—	$	151,426	$	66,481	(82)	$	(365)	$	521	$	2,062	$	220,128

4

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (CONTINUED)

(In thousands)

(Unaudited)

	Common Stock			Preferred Stock			Paid-in Capital - Common		Paid-in Capital - Preferred		Treasury Stock			Retained Deficit		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’ Equity
	Shares	Amount		Shares	Amount						Shares	Amount
Balance as of September 30, 2021	32,915	$	3	700	$	—	$	142,314	$	68,853	(82)	$	(365)	$	(21,996)	$	(279)	$	188,530
Net income	—	—		—	—		—		—		—	—		14,822		—		14,822
Issuance of common stock under employee plans	111	—		—	—		—		—		—	—		—		—		—
Shares withheld for payroll taxes	(37)	—		—	—		(301)		—		—	—		—		—		(301)
Stock-based compensation	—	—		—	—		706		—		—	—		—		—		706
Preferred stock dividends	—	—		—	—		—		—		—	—		(1,323)		—		(1,323)
Unrealized gain on interest rate swap	—	—		—	—		—		—		—	—		—		173		173
Balance as of December 31, 2021	32,989	$	3	700	$	—	$	142,719	$	68,853	(82)	$	(365)	$	(8,497)	$	(106)	$	202,607
Net Income	—	—		—	—		—		—		—	—		7,354		—		7,354
Issuance of common stock under employee plans	177	—		—	—		—		—		—	—		—		—		—
Shares withheld for payroll taxes	(42)	—		—	—		(327)		—		—	—		—		—		(327)
Stock-based compensation	—	—		—	—		1,534		—		—	—		—		—		1,534
Preferred stock dividends	—	—		—	—		—		—		—	—		(1,294)		—		(1,294)
Unrealized gain on interest rate swap	—	—		—	—		—		—		—	—		—		861		861
Balance as of March 31, 2022	33,124	$	3	700	$	—	$	143,926	$	68,853	(82)	$	(365)	$	(2,437)	$	755	$	210,735
Net income	—	—		—	—		—		—		—	—		843		—		843
Issuance of common stock under employee plans	2	—		—	—		—		—		—	—		—		—		—
Shares withheld for payroll taxes	—	—		—	—		(5)		—		—	—		—		—		(5)
Preferred stock conversion	724	—		(24)	—		2,372		(2,372)		—	—		—		—		—
Stock-based compensation	—	—		—	—		1,033		—		—	—		—		—		1,033
Preferred stock dividends	—	—		—	—		—		—		—	—		(1,296)		—		(1,296)
Unrealized gain on interest rate swap	—	—		—	—		—		—		—	—		—		334		334
Balance as of June 30, 2022	33,850	$	3	676	$	—	$	147,326	$	66,481	(82)	$	(365)	$	(2,890)	$	1,089	$	211,644

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

5

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Nine Months Ended June 30,
	2023		2022
Cash flows from operating activities:
Net income	$	5,619	$	23,019
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization	18,649		12,124
Amortization of right-of-use assets for operating leases	15,439		12,636
Bad debt expense	1,447		2,077
Stock-based compensation	3,815		3,273
Deferred income taxes	2,594		(6,283)
Training equipment credits earned, net	1,299		(921)
Unrealized (loss) gain on interest rate swap	(151)		1,368
Other (gains) losses, net	(197)		537
Changes in assets and liabilities:
Receivables	(2,869)		(8,234)
Prepaid expenses	(3,293)		(1,439)
Other assets	623		(621)
Notes receivable	(22)		956
Accounts payable, accrued expenses and other current liabilities	(13,949)		1,275
Deferred revenue	(16,884)		(16,809)
Operating lease liability	(16,094)		(10,778)
Other liabilities	(759)		(4,274)
Net cash (used in) provided by operating activities	(4,733)		7,906
Cash flows from investing activities:
Cash paid for acquisition, net of cash acquired	(16,381)		(26,514)
Purchase of property and equipment	(48,847)		(69,608)
Proceeds from maturities of held-to-maturity securities	29,000		—
Return of capital contribution from unconsolidated affiliate	—		188
Net cash used in investing activities	(36,228)		(95,934)
Cash flows from financing activities:
Proceeds from revolving credit facility	90,000		—
Proceeds from term loan	—		38,000
Debt issuance costs for long-term debt	(484)		(355)
Payment of preferred stock cash dividend	(2,528)		(2,617)
Payments on term loans and finance leases	(1,179)		(19,004)
Payment of payroll taxes on stock-based compensation through shares withheld	(761)		(633)
Net cash provided by financing activities	85,048		15,391
Change in cash, cash equivalents and restricted cash	44,087		(72,637)
Cash and cash equivalents, beginning of period	66,452		133,721
Restricted cash, beginning of period	3,544		12,256
Cash, cash equivalents and restricted cash, beginning of period	69,996		145,977
Cash and cash equivalents, end of period	110,511		70,713
Restricted cash, end of period	3,572		2,627
Cash, cash equivalents and restricted cash, end of period	$	114,083	$	73,340

6

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(In thousands)

(Unaudited)

	Nine Months Ended June 30,
	2023		2022
Supplemental disclosure of cash flow information:
Income taxes paid, net of refunds	$	967	$	696
Interest paid	6,442		1,208
Training equipment obtained in exchange for services	500		1,247
Depreciation of training equipment obtained in exchange for services	558		691
Accounts payable and accrued expenses for capital expenditures	1,836		(374)
Preferred dividends payable	1,263		1,296
CARES Act funds received for student emergency grants	—		6,689
CARES Act funds disbursed for student emergency grants	—		(6,774)

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

7

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)

(Unaudited)

Note 1 - Nature of the Business

Universal Technical Institute, Inc., which together with its subsidiaries is referred to as the “Company,” “we,” “us” or “our,” was founded in 1965 and is a leading workforce solutions provider of transportation, skilled trades and healthcare education programs, whose mission is to serve students, partners, and communities by providing quality education and support services for in-demand careers across a number of highly-skilled fields. We offer the majority of our programs in a blended learning model that combines instructor-facilitated online teaching and demonstrations with hands-on labs. In conjunction with the Concorde Career Colleges, Inc. acquisition on December 1, 2022 (the “Concorde Acquisition”), we redefined our reporting structure into two reportable segments as follows:

Universal Technical Institute (“UTI”): UTI operates 16 campuses located in nine states and offers a wide range of degree and non-degree transportation and skilled trades technical training programs under brands such as Universal Technical Institute, Motorcycle Mechanics Institute, Marine Mechanics Institute, NASCAR Technical Institute, and MIAT College of Technology (“MIAT”). UTI also offers manufacturer specific advanced training programs, which include student-paid electives, at our campuses and manufacturer or dealer sponsored training at certain campuses and dedicated training centers. Lastly, UTI provides dealer technician training or instructor staffing services to manufacturers. UTI works closely with over 35 original equipment manufacturers and industry brand partners to understand their needs for qualified service professionals.

Concorde Career Colleges (“Concorde”): Concorde operates across 17 campuses in eight states, offering degree, non-degree, and continuing education programs in the allied health, dental, nursing, patient care and diagnostic fields. Concorde believes in preparing students for their health care careers with practical, hands-on experiences including opportunities to learn while providing care to real patients. Prior to graduation, students will complete a number of hours in a clinical setting or externship, depending upon their program of study. We acquired Concorde on December 1, 2022. See Note 4 on “Acquisitions” for additional information.

“Corporate” includes corporate related expenses that are not allocated to the UTI or Concorde reportable segments. In prior years, these costs were allocated across our former “Postsecondary Education” reportable segment and “Other” category based upon compensation expense. Additional information about our reportable segments is presented in Note 19.

Our primary source of revenues is currently tuition and fees paid by students. To pay for a substantial portion of their tuition, the majority of students rely on funds received from federal financial aid programs under Title IV of the Higher Education Act of 1965, as amended (“HEA”), as well as other federal programs. For further discussion, see Note 2 on “Summary of Significant Accounting Policies - Concentration of Risk” and Note 24 on “Government Regulation and Financial Aid” included in our 2022 Annual Report on Form 10-K.

Note 2 - Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, our condensed consolidated financial statements do not include all the information and footnotes required by GAAP for complete financial statements. Normal and recurring adjustments considered necessary for a fair statement of the results for the interim periods have been included. Operating results for the nine months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the year ending September 30, 2023. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2022 Annual Report on Form 10-K.

The unaudited condensed consolidated financial statements include the accounts of Universal Technical Institute, Inc. and our wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated. The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates.

Other than described below, there have been no material changes or developments in our significant accounting policies or evaluation of accounting estimates and underlying assumptions or methodologies from those disclosed in Note 2 of our 2022 Annual Report on Form 10-K.

8

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)

(Unaudited)

New Significant Accounting Policy for Retail Installment Contract Receivables

Concorde currently and historically offers certain students retail installment contracts for payment of their tuition that is not covered by federal student financial aid or other funding sources. The retail installment contracts are due to Concorde from current and former students, are generally due over a period of up to five years, and bear interest ranging from 0 percent to 15 percent. New retail installment contracts are being issued at interest rates between 0 percent to 9 percent. Due to the fact that there is no interest imposed on certain of the retail installment contracts, primarily while students are actively completing their selected programs, we calculate the imputed interest expense on the retail installment contracts. However, the imputed interest expense is not considered material for such retail installment contracts. Retail installment contract receivables are recorded at amortized cost less an allowance for credit losses that are not expected to be recovered. The allowance for credit losses is recognized at inception and is reassessed each reporting period. The short-term portion of the retail installment contract receivable and related allowance for credit losses are included in “Receivables, net” while the long-term portion of the retail installment contract receivable and related allowance for credit losses is presented in “Other assets” on our condensed consolidated balance sheets.

Reclassifications

As previously noted, as a result of the Concorde Acquisition, beginning with the three months ended December 31, 2022, we have two reportable segments: UTI and Concorde. Additionally, “Corporate” includes corporate related expenses that are not allocated to either the UTI or Concorde reportable segments. The segment disclosures presented in Note 19 for the three and nine months ended June 30, 2022 have been revised from the prior year presentation to reflect the new reportable segments.

Additionally, starting with the three months ended December 31, 2022, we have reclassified “Accrued tool sets” into “Accounts payable and other accrued expenses” on our condensed consolidated balance sheets for reporting purposes. As of September 30, 2022, $3.2 million was reclassified from “Accrued tool sets” to “Accounts payable and other accrued expenses” on the condensed consolidated balance sheets for comparable presentation. The breakout of accrued tool sets is now disclosed in Note 12. Further, the activity related to the accrued tool sets balance is now reported in the “Accounts payable and other accrued expenses” line on the condensed consolidated statement of cash flows for the nine months ended June 30, 2023. We reclassified $0.9 million from “Accrued tool sets” to “Accounts payable and other accrued expenses” on the condensed consolidated statement of cash flow for the nine months ended June 30, 2022 for comparable presentation.

Note 3 - Recent Accounting Pronouncements

Effective in Fiscal 2023

In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides optional expedients and exceptions for applying GAAP to contract modifications, hedging relationships and other transactions affected by reference rate reform, if certain criteria are met. This new guidance only applies to contracts and other transactions that reference London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform. An entity may elect to apply the amendments for contract modifications as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. The amendments in ASU 2020-04 do not apply to contract modifications made after December 31, 2022. On April 3, 2023, we executed an amendment for our Avondale Term Loan (as defined below) to convert the stated rate from LIBOR to Secured Overnight Financing Rate (“SOFR”) (which is further described in Note 13). Additionally, on March 31, 2023, we terminated our existing interest rate swap and entered into a new interest rate swap agreement, effective April 3, 2023, with the Avondale Lender that effectively fixes the interest rate we pay on 50% of the principal amount of the Avondale Term Loan at 3.45% for the entire loan term (which is further described in Note 14). In executing the amendment, we adopted several of the practical expedients allowed under ASU 2020-04, including updating the designated hedged risk in our outstanding cash flow hedging relationship to match the risk presented in the modified interest payments and to continue our hedging relationship that falls within the scope of ASU 2020-04. The adoption of the new guidance in ASU 2020-04 did not have a material impact on our condensed consolidated financial statements.

9

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)

(Unaudited)

Note 4 - Acquisitions

Concorde Career Colleges

On December 1, 2022, we completed the Concorde Acquisition. Concorde operates 17 campuses across eight states with approximately 7,600 students, and offers its programs via in-person, hybrid and online formats. Concorde offers more than 20 programs across the allied health, dental, nursing, patient care, and diagnostic fields. The acquisition expands our portfolio of offerings into the higher-growth healthcare arena and creates the opportunity to bring workforce educational solutions to a broader array of students and employers.

Under the terms of the Stock Purchase Agreement (the “Purchase Agreement”), dated May 3, 2022, by and among the Company, Concorde, Liberty Partners Holdings 28, L.L.C., a Delaware limited liability company, and Liberty Investment IIC, LLC, a Delaware limited liability company (each a “Seller,” and collectively, the “Sellers”); and Liberty Partners L.P., a Delaware limited partnership, in its capacity as a representative of the Sellers, we acquired all of the issued and outstanding shares of capital stock of Concorde for a base purchase price of $50.0 million, less $1.9 million of net adjustments including the post-closing working capital adjustment, for total cash consideration paid of $48.1 million. As a result of the transactions contemplated by the Purchase Agreement, Concorde is now a wholly-owned subsidiary of the Company. We funded the consideration paid for the Concorde Acquisition by the revolving credit facility entered into on November 18, 2022. See Note 13 for further details on the revolving credit facility.

In connection with the Concorde Acquisition, we incurred total transaction costs of $5.3 million, of which $3.0 million was incurred during the year ended September 30, 2022 and $2.3 million was incurred during the nine months ended June 30, 2023. These costs are included in “Selling, general and administrative” expenses in the condensed consolidated statements of operations for the applicable period.

Allocation of the purchase price

Under the acquisition method of accounting, the total purchase price was allocated to the identifiable assets acquired and the liabilities assumed based on our preliminary valuation estimates of the fair values as of the acquisition date. The fair value and allocation of the business combination are preliminary, are based upon management’s best estimates and assumptions, and are subject to future revision. We will continue our analysis under the provisions of ASC 805 which allows companies one year to complete acquisition related adjustments which may result in potential adjustments to the carrying value of the respective recorded assets and liabilities.

The preliminary allocation of the purchase price at December 1, 2022 is summarized as follows:

Assets acquired:
Cash and cash equivalents	$	30,064
Restricted cash	1,689
Accounts receivable, net	6,740
Prepaid expenses	2,957
Other current assets	827
Property and equipment	23,950
Right-of-use assets for operating leases	71,153
Goodwill	11,600
Intangible assets	5,400
Deferred tax assets	4,460
Other assets	4,997
Total assets acquired	$	163,837

10

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)

(Unaudited)

Less: Liabilities assumed
Accounts payable and accrued expenses	$	15,482
Deferred revenue	20,145
Operating lease liability, current portion	10,011
Long-term debt, current portion (1)	807
Other current liabilities	208
Long-term debt (1)	5,468
Operating lease liability	63,582
Total liabilities assumed	115,703
Net assets acquired	$	48,134

(1)    Long-term debt consists of one lease classified as a finance lease under ASC 842.

Due to the timing of the acquisition, the amounts for income tax liabilities, including deferred income taxes, pending finalization of estimates and assumptions in respect of certain tax aspects of the transaction, are considered preliminary and subject to change. Any changes in the amounts for income tax liabilities could cause further changes to intangible assets and property and equipment.

The Company will finalize these amounts no later than one year from the acquisition date once it obtains the information necessary to complete the measurement process. Any changes resulting from facts and circumstances that existed as of the acquisition date may result in adjustments to the preliminary amounts disclosed above which may impact the reported results in the period those adjustments are identified. Since December 31, 2022, we have adjusted the purchase price allocation for operating and finance lease assets and liabilities due to changes in the incremental borrowing rates. Additionally, we identified further adjustments required for accounts receivable, prepaid expenses, deferred income taxes, deferred revenue, and accounts payable and accrued expenses. These adjustments, in conjunction with the updates to the operating and finance lease assets and liabilities, resulted in further changes to both intangible assets and goodwill. These adjustments did not have a material impact on the results of operations since the date of acquisition. Other than a $7.2 million adjustment to operating lease liabilities, these adjustments did not have a material impact on the financial statements since the date of acquisition.

The amount allocated to goodwill of $11.6 million represents the acquired assembled workforce. None of the goodwill is expected to be deductible for tax purposes. Factors that contributed to a purchase price resulting in the recognition of goodwill include Concorde’s strategic fit into our growth and diversification strategy, which is focused on offering a broader array of high-quality, in-demand workforce education solutions which both prepare students for a variety of careers in fast-growing fields and help close the country's skills gap by leveraging key industry partnerships.

The purchase price allocation requires subjective estimates that, if incorrectly estimated, could be material to our condensed consolidated financial statements including the amount of depreciation and amortization expense. The fair value of the property and equipment was estimated using the cost and market approaches as of the valuation date. The fair value of the leases were estimated using the income and market approaches to determine if there was any favorable or unfavorable terms in place.

The intangible assets acquired, which primarily consist of the accreditations and regulatory approvals, trademarks and trade names, and curriculum, were valued using different valuation techniques depending upon the nature of the intangible asset acquired, all of which are considered level 3 as defined in Note 7. The accreditations and regulatory approvals were valued using the multi-period excess earnings method (“MPEEM”) under the income approach. The MPEEM is a variation of discounted cash-flow analysis. Rather than focusing on the whole entity, the MPEEM isolates the cash flows that can be associated with a single intangible asset and measures fair value by discounting them to present value. The trademarks and trade names were valued using the relief from royalty method. The value of the trade name encompasses all items necessary to generate revenue utilizing the trade name. The curriculum was valued using the cost approach.

11

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)

(Unaudited)

The table below presents the revised summary of the intangible assets acquired as a result of other purchase price allocation updates and the useful lives of these assets:

Intangible Asset	Useful life	Amount
Accreditations and regulatory approvals	Indefinite	$	3,500
Trademarks and trade names	10 years	500
Curriculum	5 years	1,400
Total		$	5,400

See Note 9 and Note 10 and for additional details on goodwill and intangible assets.

Student receivables

When financial assets are acquired in connection with a business combination, we evaluate whether those acquired financial assets have experienced a more-than-insignificant deterioration in credit quality since origination. Financial assets acquired with evidence of such credit deterioration are referred to as purchased credit deteriorated (“PCD”) assets and reflect the acquirer’s assessment at the acquisition date. The student receivables acquired in the Concorde Acquisition were reviewed to determine if any had experienced a more-than-insignificant deterioration in credit quality since origination. Student receivables of approximately $2.3 million met the established criteria to indicate a more-than insignificant deterioration in credit quality and were identified as PCD assets. Using our best estimate of projected losses over the term of the contracts, we calculated an allowance for credit losses on these PCD assets of approximately $1.0 million.

Pro forma financial information

The following unaudited pro forma financial information summarizes our results of operations as though the acquisition occurred on October 1, 2021:

	Three Months Ended				Nine Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Revenue	$	153,286	$	146,834	$	473,131	$	448,903
Net (loss) income	(509)		(3,397)		5,498		16,950

The unaudited pro forma financial information includes adjustments to reflect the additional amortization that would have been charged assuming the fair value adjustments to intangible assets and the finance lease asset had been applied from October 1, 2021, with the related tax effects. The unaudited pro forma financial information also includes adjustments to reflect the additional interest expense on the new Credit Facility issued to fund the acquisition (see Note 13 for further details on the Credit Facility). Lastly, the unaudited pro forma financial information includes adjustments to reflect the reduction in depreciation expense assuming the fair value adjustments to property and equipment assets had been applied from October 1, 2021.

This unaudited pro forma financial information is for informational purposes only. It does not reflect the integration of the business or any synergies or incremental costs that may result from the acquisition. As such, it is not indicative of the results of operations that would have been achieved had the acquisition been consummated on October 1, 2021. In addition, the unaudited pro forma financial information amounts are not indicative of future operating results.

MIAT College of Technology

On November 1, 2021, using available operating cash, we acquired all of the issued and outstanding shares of capital stock of MIAT for $26.0 million base purchase price plus $2.8 million working capital surplus for total cash consideration paid of $28.8 million. MIAT is a post-secondary school that offers vocational and technical certificates and degrees across aviation maintenance, energy technology, wind energy technology, robotics and automation, non-destructive testing, heating ventilation air conditioning and refrigeration, and welding disciplines.

12

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)

(Unaudited)

The acquisition, as part of our growth and diversification strategy, allows us to expand MIAT programs throughout UTI brand campuses and extend UTI’s presence and programs into the Canton, Michigan market where MIAT has been for over 50 years. Other expected synergies include operating and purchasing cost efficiencies and broadening the opportunity for student growth at the acquired MIAT campuses by leveraging our high school and national marketing and admissions infrastructure.

In connection with this acquisition, we incurred total transaction costs of $1.7 million of which $0.9 million were incurred during the year ended September 30, 2022 and $0.8 million during the year ended September 30, 2021. These costs are included in “Selling, general and administrative” expenses in the condensed consolidated statements of operations for the applicable period.

The final allocation of the purchase price at November 1, 2021 is summarized as follows:

Assets acquired:
Cash and cash equivalents	$	2,301
Accounts receivable, net	3,230
Prepaid expenses	268
Other current assets	507
Property and equipment	3,043
Goodwill	8,637
Intangible assets	16,200
Right-of-use assets for operating leases	14,979
Other assets	314
Total assets acquired	$	49,479
Less: Liabilities assumed
Accounts payable and accrued expenses	$	1,720
Deferred revenue	1,843
Operating lease liability, current portion	817
Deferred tax liabilities, net	1,975
Operating lease liability	14,216
Other liabilities	93
Total liabilities assumed	20,664
Net assets acquired	$	28,815

The goodwill of $8.6 million arising from the acquisition consists largely of the growth and operating synergies expected from integrating MIAT into UTI. The total amount of goodwill expected to be deductible for tax purposes is approximately $0.6 million. See Note 9 for additional details on goodwill.

The accreditations and regulatory approvals were valued using the multi-period excess earnings method (“MPEEM”) under the income approach. The trademarks and trade names were valued using the relief from royalty method. The curriculum was valued using the cost approach. The table below presents a summary of the intangible assets acquired and the useful lives of these assets:

13

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)

(Unaudited)

Intangible Asset	Useful life	Amount
Accreditations and regulatory approvals	Indefinite	$	12,800
Trademarks and trade names (1)	Indefinite	3,000
Curriculum	5 years	400
Total		$	16,200

(1)     During the fourth quarter of 2022, in conjunction with our growth and diversification initiatives, we completed a branding study and determined that the useful life of the MIAT trademarks and trade name was no longer indefinite, and a four-year finite useful life was more appropriate. We completed the required impairment testing when changing from an indefinite to a finite useful life for an intangible asset and determined that the carrying value of the MIAT trademarks and trade name exceeded its fair value. We determined the fair value of intangible asset to be $1.0 million as of September 30, 2022 using the relief from royalty method and recorded an intangible asset impairment charge of $2.0 million during the year ended September 30, 2022.

Pro forma financial information is not presented as the fiscal 2021 revenues and earnings of MIAT were not material to our condensed consolidated statements of operations. MIAT is included in the “UTI” reporting unit and reportable segment disclosed in Note 19 on Segments.

Note 5 - Revenue from Contracts with Customers

Nature of Goods and Services

Revenues across the UTI and Concorde segments consist primarily of student tuition and fees derived from the programs we provide after reductions are made for discounts and scholarships that we sponsor and for refunds for students who withdraw from our programs prior to specified dates. We apply the five-step model outlined in ASC 606. Tuition and fee revenue is recognized ratably over the term of the course or program offered.

The majority of the UTI programs are designed to be completed in 28 to 96 weeks. The UTI advanced training programs range from 12 to 23 weeks in duration. UTI also provides dealer technician training or instructor staffing services to manufacturers. Revenues are recognized as transfer of the services occurs.

The majority of Concorde’s core programs are nine to ten months in duration and are billed in full at the start of the program. Clinical programs are 12 to 24 month programs that are billed by academic term. Clinical programs may have up to nine academic terms that last two to three months each. Revenues are recognized as transfer of the services occurs.

In addition to revenue from tuition and fees, UTI and Concorde derive supplemental revenues from sales of textbooks and program supplies and other revenues, which are recognized as the transfer of goods or services occurs. Deferred revenue represents the excess of tuition and fee payments received as compared to tuition and fees earned and is reflected as a current liability in our condensed consolidated balance sheets because it is expected to be earned within the next 12 months.

All of our revenues are generated within the United States. The impact of economic factors on the nature, amount, timing and uncertainty of revenue and cash flows is consistent across our various programs for both the UTI and Concorde segments. See Note 19 for disaggregated segment revenue information.

Proprietary Loan Program Notes Receivable

Certain UTI students participate in a proprietary loan program that extends repayment terms for their tuition beyond the time that they are in school. We purchase said loans from the lender. Based on historical collection rates, we believe at least 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. These amounts are presented as “Notes receivable, current portion” and “Notes receivable, less current portion” on our condensed consolidated balance sheets.

14

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)

(Unaudited)

Retail Installment Contract Receivables

Concorde currently and historically offers certain students retail installment contracts for payment of their tuition that are not covered by federal student financial aid or other funding sources. The retail installment contracts are due to Concorde from current and former students, are generally due over a period of up to five years, and bear interest ranging from 0 percent to 15 percent. New retail installment contracts are being issued at interest rates between 0 percent to 9 percent. Due to the fact that there is no interest imposed on certain of the retail installment contracts, primarily while students are actively completing their selected programs, we calculate the imputed interest expense on the retail installment contracts. However, the imputed interest expense is not considered material for such retail installment contracts. The short-term portion of the retail installment contract receivable and related allowance for credit losses are included in “Receivables, net” while the long-term portion of the retail installment contract receivable and related allowance for credit losses is presented in “Other assets” on our condensed consolidated balance sheets.

Contract Balances

Contract assets primarily relate to our rights to consideration for a student’s progress through our training program in relation to our services performed but not billed at the reporting date. The contract assets are transferred to the receivables when the rights become unconditional. Currently, we do not have any contract assets that have not transferred to a receivable. Our deferred revenue is considered a contract liability and primarily relates to our enrollment agreements where we received payments for tuition, but we have not yet delivered the related training programs to satisfying the related performance obligations. The advance consideration received from students or Title IV funding is deferred revenue until the training program has been delivered to the students.

The following table provides information about receivables and deferred revenue resulting from our enrollment agreements with students:

	June 30, 2023		September 30, 2022
Receivables (1)	$	60,627	$	46,826
Deferred revenue	57,484		54,223

(1)     Receivables includes tuition receivables, retail installment contract receivables and notes receivable, both current and long term.

During the nine months ended June 30, 2023, the deferred revenue balance included decreases for revenues recognized during the period, increases related to new students who started their training programs during the period and the addition of deferred revenue from the Concorde Acquisition.

Note 6 - Investments

In July 2022, we invested a portion of our cash and cash equivalents in short-term investments which primarily consist of corporate and government bonds with a minimum credit rating of A. We had the ability and intention to hold these investments until maturity and therefore classified these investments as held-to-maturity and recorded them at amortized cost and presented them in “Held-to-maturity investments” on our consolidated balance sheets as of September 30, 2022. As of June 30, 2023, there were no outstanding held-to-maturity investments as all of the securities matured by December 31, 2022 and there were no new purchases of held-to-maturity investments during the nine months ended June 30, 2023.

The amortized cost, gross unrealized gains or losses, and fair value of investments classified as held-to-maturity at September 30, 2022 were as follows:

	September 30, 2022
			Gross Unrealized				Estimated Fair
Due in less than 1 year:	Amortized Cost		Gains		Losses		Market Value
Corporate and government bonds	$	28,918	$	—	$	(19)	$	28,899

15

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)

(Unaudited)

Investments are exposed to various risks, including interest rate, market and credit risk. As a result, it is possible that changes in the values of these investments may occur and that such changes could affect the amounts reported in the condensed consolidated financial statements.

Note 7 - Fair Value Measurements

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

Level 1:    Defined as quoted market prices in active markets for identical assets or liabilities.

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

Level 3:    Defined as unobservable inputs that are not corroborated by market data.

Any transfers of investments between levels occurs at the end of the reporting period. Assets measured or disclosed at fair value on a recurring basis consisted of the following:

			Fair Value Measurements Using
	June 30, 2023		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Money market funds(1)	$	9,304	$	9,304	$	—	$	—
Notes receivable(2)	35,894		—		—		35,894
Total assets at fair value on a recurring basis	$	45,198	$	9,304	$	—	$	35,894
Revolving credit facility and term loans(4)	157,401		—		157,401		—
Total liabilities at fair value on a recurring basis	$	157,401	$	—	$	157,401	$	—

			Fair Value Measurements Using
	September 30, 2022		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Money market funds(1)	$	23,439	$	23,439	$	—	$	—
Notes receivable(2)	35,872		—		—		35,872
Corporate and government bonds(3)	28,899		28,899		—		—
Total assets at fair value on a recurring basis	$	88,210	$	52,338	$	—	$	35,872
Term loans(4)	68,083		—		68,083		—
Total liabilities at fair value on a recurring basis	$	68,083	$	—	$	68,083	$	—

(1) Money market funds and other highly liquid investments with maturity dates less than 90 days are reflected as “Cash and cash equivalents” in our condensed consolidated balance sheets as of June 30, 2023 and September 30, 2022.

16

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)

(Unaudited)

(2) Notes receivable relate to UTI’s proprietary loan program and are reflected as “Notes receivable, current portion” and “Notes receivable, less current portion” in our condensed consolidated balance sheets as of June 30, 2023 and September 30, 2022.

(3) Corporate and government bonds are reflected as “Held-to-maturity investments” in our condensed consolidated balance sheets as of September 30, 2022.

(4) The Credit Facility and Term Loans bear interest at rates commensurate with market rates, and therefore, the respective carrying values approximate fair value (Level 2).

Note 8 - Property and Equipment, net

Property and equipment, net consisted of the following:

	Depreciable Lives (in years)	June 30, 2023		September 30, 2022
Land	—	$	25,601	$	16,603
Buildings and building improvements	3-30	160,893		126,244
Leasehold improvements	1-20	82,755		86,751
Training equipment	3-10	105,600		96,907
Office and computer equipment	3-10	34,510		31,900
Curriculum development	3-5	2,416		20,130
Software developed for internal use	1-5	12,594		12,150
Vehicles	5	1,406		1,458
Right-of-use assets for finance leases	2-15	5,603		215
Construction in progress	—	16,217		16,359
		447,595		408,717
Less: Accumulated depreciation and amortization		(181,357)		(194,425)
Total		$	266,238	$	214,292

Depreciation expense related to property and equipment was $6.5 million and $18.2 million for the three and nine months ended June 30, 2023, and $4.5 million and $12.0 million for the three and nine months ended June 30, 2022.

In March 2023, we purchased the three primary buildings and the associated land at our UTI Orlando, Florida campus which was previously leased. The purchase resulted in an increase in our buildings of $15.2 million, an increase in land of $9.0 million and the reclassification of assets from leasehold improvements to building improvements of $19.1 million.

Note 9 - Goodwill

Our goodwill balance of $28.5 million as of June 30, 2023 represents the excess of the cost of an acquired business over the estimated fair values of the assets acquired and liabilities assumed. The changes in the carrying value of goodwill are presented in the table below.

	June 30, 2023		September 30, 2022
Balance at beginning of period	$	16,859	$	16,859
Additions to Goodwill for acquisition of Concorde	11,600		—
Balance at end of period	$	28,459	$	16,859

Of the $28.5 million recorded as goodwill as of June 30, 2023, $11.6 million resulted from the acquisition of Concorde, $8.6 million relates to the acquisition of MIAT as of November 1, 2021, and $8.2 million resulted from the acquisition of our motorcycle and marine education business in Orlando, Florida in 1998. As indicated in Note 1, as a result of the Concorde Acquisition, we have two reportable segments. Prior to the three months ended December 31, 2022, all goodwill related to our Postsecondary Education reportable operating segment for UTI.

17

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)

(Unaudited)

The table below summarizes the goodwill balance by reportable segment:

	June 30, 2023		September 30, 2022
UTI	$	16,859	$	16,859
Concorde	11,600		—
Total	$	28,459	$	16,859

Goodwill is reviewed at least annually for impairment, which may result from the deterioration in the operating performance of the acquired businesses, adverse market conditions, adverse changes in applicable laws or regulations and a variety of other circumstances. Our goodwill is tested annually for impairment as of August 1 and more frequently if events or circumstances lead to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. There were no indicators of goodwill impairment as of June 30, 2023.

Note 10 - Intangible Assets

The following table provides the gross carrying value, accumulated amortization, net book value and remaining useful life for those intangible assets that are subject to amortization as of June 30, 2023:

	Gross Carrying Value		Accumulated Amortization		Net Book Value		Weighted Average Remaining Useful Life (Years)
Accreditations and regulatory approvals	$	16,300	$	—	$	16,300	Indefinite
Trademarks, trade names and other	1,942		(597)		1,345		5.34
Curriculum	1,800		(297)		1,503		4.22
Total	$	20,042	$	(894)	$	19,148	4.75

The following table provides the gross carrying value, accumulated amortization, net book value and remaining useful life for those intangible assets that were subject to amortization as of June 30, 2022:

	Gross Carrying Value		Accumulated Amortization		Net Book Value		Weighted Average Remaining Useful Life (Years)
Accreditations and regulatory approvals - MIAT	$	12,800	$	—	$	12,800	Indefinite
Trademarks and trade names - MIAT	3,000		—		3,000		Indefinite
Curriculum - MIAT	400		(53)		347		4.33
Non-compete agreement and trade name	442		(345)