Universal Technical Institute Inc (UTI) 2025 Q1 法說會逐字稿

Good afternoon and welcome to the Universal Technical Institute Q1 2025 earnings conference call. (Operator Instructions) Please also note today's event is being recorded at this time.

I'd like to turn the floor over to Matt Kempton VP, corporate Finance and investor relations. Sir. Please go ahead.

Hello and welcome to Universal Technical Institute fiscal first quarter 2025 earnings call. Joining me today are our CEO Jerome A. Grant, the Interim CFO Christine Kline. Following our prepared remarks, we will open the call for your questions. A replay of this call it's transcript and our investor presentation will be archived on the Investor Relations section of our website at investor.uti.edu along with our earnings release issued earlier today and furnished to the SEC.

During this call, we may make comments that contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995 which by their nature address, matters that are in the future and are uncertain. These statements reflect management's current beliefs and expectations and are subject to a number of factors that may cause actual results to differ materially from those statements.

These factors include but are not limited to those discussed in our earnings release and SEC filings. These statements do not guarantee future performance and therefore undue reliance should not be placed upon them. We do not intend to update these forward-looking statements as a result of new information or future developments except as required by law.

Please note unless otherwise stated, all comparisons in this call will be against our results for the comparable period of fiscal 2024. The information presented today also includes non-GAAP financial measures. These should be viewed in addition to and not as a substitute for the company's reported results prepared in accordance with us, GAAP.

All non-GAAP financial measures referenced in today's call are reconciled in our earnings release to the most directly comparable GAAP measure. For more information regarding definitions of our non-GAAP measures. Please see our earnings release financial supplement and investor presentation.

With that, I will turn the call over to Jerome A. Grant, CEO of Universal Technical Institute for his prepared remarks. Jerome?

Thank you, Matt. Good afternoon, everyone and thank you for joining us to discuss the results for the first quarter of 2025.

As we continue to execute on our growth, diversification and optimization strategy, we delivered another quarter of our performance by exceeding expectations across all key metrics. For this I want to sincerely thank our divisional and corporate teams along with our partners and students for their exceptional efforts and dedication to delivering strong results, time and time again.

With that, let's jump into the results for the quarter revenue for the quarter grew over 15% year over year to $201.4 million. Average full time active students increased 11% year-over-year to 25,062 students net income increased $22.2 million with diluted earnings per share of $0.40 .

Adjusted EBITDA improved an impressive 45% year over year to $35.5 million. Total new student starts increased year over year by over 22% for the quarter. So, what's driving these strong results? First, top line performance exceeded our expectations across both divisions.

On the concrete side, we continue to make higher strategic investments in our marketing and admissions efforts which led to very strong student start performance for the quarter. We will continue investing in our conquered marketing and admissions teams to continue to improve results.

On the UTI side, our first two starts for the quarter were exceptionally strong, which we believe was primarily the result of deferrals from the fourth quarter due to FAFSA delays. As the quarter progressed, our remaining starts performed according to plan to look at the bottom line.

In addition to our overachievement on revenue, we did not spend as much as we initially expected to on some specific transformation initiatives planned in the quarter. This was a result of shifting some of these into the second quarter that said we do anticipate our initiative spend increasing in the second quarter and then normalizing throughout the rest of the year overall.

We're very happy with the results we're reporting today and we remain confident in our ability to deliver both year over year top and bottom line growth throughout the balance of 2025. Now, I want to briefly take a moment to express how incredibly proud we are of our students, faculty and staff for their unwavering dedication to supporting those impacted by the California wildfires.

Their efforts, whether through organizing food drives, spearheading fundraising initiatives or volunteering their time, truly exemplify the values we hold as an organization, this collective commitment to making a difference, highlights the strength of our community and our shared purpose of coming together to help those in need during these difficult times.

For the most part, we had limited impact to our Southern California campuses during this tragic event while there was a slight dip in attendance during the most challenging periods ,due to significant disruptions in commuter patterns. We're pleased to report that this did not impact operations.

Our thoughts remain with those who are affected and we will continue to support our community through these challenging times. From a regulatory standpoint, we are encouraged that the new administration has expressed an interest in reducing regulatory, burden and believe any changes that fairly compare schools of all types based on outcomes will contribute to the more favorable regulatory environment for us.

While the specifics regarding the Department of Education remain unclear. I'm hopeful that the administration will focus on student outcomes and helping schools expand in areas where employment demand is extremely high.

That said our attention remains firmly on the factors within our control and we are unwavering in our commitment to achieving strong student outcomes. Lastly, before diving into each division's details, we're making great progress on our CFO search.

Our elevated company profile has certainly expanded the available talent pool and we're highly confident in finding an exceptional candidate for the role. We look forward to providing an update in the coming months. Turning to divisional specific highlights for the quarter, the Concord division continues to deliver strong results with consistent year-over-year growth.

The positive top line results are primarily due to our marketing investments as we continue to focus on maximizing the performance of our health care division. Moreover, the increasing effectiveness of our admissions team remains a key driver of growth across the division as well.

As for Concord's program expansion strategies, we remain on track to launch [10 cash pay ]short course programs across the Concord campuses in 2025. Our new nursing program in Jacksonville, Florida also remains on track to launch in mid fiscal 2025 and the Dallas Nursing Program capacity increase is still on track to begin fiscal 2025 which will increase our capacity by an additional 60 students.

Turning to our partnerships, as we noted last quarter, we're progressing on Concord's partnership with Heartland Dental to construct a new co-branded campus. This project is still on track to open in early fiscal 2026 and will initially launch as a non-title four campus for Dental Assistants and High Chest.

When Concord growth restrictions are lifted, we plan to seek approval to offer title four funding as well.as a reminder, we anticipate this campus will add more than $4 million in annual run rate revenue as well as contribute to Concord's EBITDA margin expansion as it scales, we look forward to keeping you updated on this partnership as it progresses.

Now on to our UTI division, the UTI division also continued to deliver year-over-year growth driven by expanded programs and increasing market demand for skilled collared workers. Our HVACR programs continue to ramp nicely across our campuses in Avondale, Long Beach and Bloomfield.

As we discussed on our last call of the nine full length programs we're launching this year across both divisions. We expect eight of those to be on existing UTI campuses. Also as previously discussed, we plan to open three campuses in 2026 subject to regulatory approval of course. With the upcoming Concord Heartland co-branded campus marking the first of these,

we're pleased to have recently announced the second location which will be a fully optimized UTI campus with a comprehensive set of program offerings in the northern suburbs of Atlanta, pending regulatory approval. From an optimization standpoint in Q1, we completed the unification of two separate Houston campuses into a single consolidated campus.

This strategic move was designed to drive operational efficiencies, reduce overhead and create more streamlined learning environment for our students. The consolidation is part of a broader effort to optimize UTI campuses for greater success in delivering quality education.

This was a significant project that required a big lift from our team and will ultimately deliver an enhanced margin profile for the combined campus. I'm very proud of what we're able to accomplish in this front and appreciate all who were involved.

We also still anticipate that by the middle of the fiscal year, our MIAT Canton camping campus along with Motorcycle Mechanics Institute, Marine Mechanics Institute and NASCAR Technical Institute campuses will all officially operate under the universal technical institute brand.

I also want to highlight our Canton campus for being recognized by the Michigan Veterans Affairs Agency as a veteran friendly institution. The agency's award reflects our commitment to supporting veterans by, providing conducive environment for their education and career transition.

Turning now to partnerships. Just this morning, we were excited to share that we've added Tesla to our successful manufacture specific and advanced training programs beginning in the spring UTIs Long Beach Campus will offer Tesla start program for collision repair.

We continue to expand our partnerships across the two divisions and this collaboration is a testament to our commitment to innovation and ensuring that our programs remain relevant and impactful in today's evolving landscape.

Building on all this great work being done by both of our divisions. I'm happy to report that we are raising our guidance ranges for fiscal 2025.

We now expect to generate consolidated revenue between $810million and $820 million reflecting approximately 11% increase year over year. We now anticipate adjusted EBITDA between $122million and $126 million and we are raising our expectations for new student starts to be from 28,500 to 29,500.

Christine will provide more details on our fiscal 2025 guidance in just a bit. As we continue into 2025. I want to remind everyone that we are officially in phase two of our multiyear North Star strategy. I'd like to take a moment to reiterate just what this entails as previously communicated.

We are committed to launching a minimum of six new programs each year across Concord and or UTI campuses pending the necessary regulatory approvals. Additionally, we've outlined plans to open at least two new campuses annually starting in 2026.

It's worth noting we announced nine new programs in 2025 and three new campuses in 2026 which demonstrates we are on track to meet or exceed both objectives and will continue to work diligently towards their successful completion.

Further details on the strategy can be found in our investor deck on our website. Overall, we're proud of the substantial growth we've achieved across both divisions, and we believe we are well positioned for continued success in the quarters and years to come.

With that. I'll turn the call over to Christine Kline, our interim CFO to review the first quarter financial results. Christine?

Thank you, Jerome. We kicked off fiscal 2025 with another quarter of strong results across the board. For the first quarter, average full time active students increased 11.1% year-over-year to 25,062 students. New student starts increased 22.3% year-over year to 5,313 starts exceeding our expectations.

The Concord division drove a 16.4% increase in average fulltime active students compared to Q1 '24 new student starts increased 26% in the first quarter, which was primarily the result of investments we've made within the division to [bolster] our marketing and admissions efforts and improve performance by Concord marketing and admissions teams.

The UCI division generated an 8% increase year-over-year in average full time active students for the quarter while new student starts grew 19% year-over-year in the first quarter. Contributing to this growth was the impact of start deferrals from the fourth quarter.

Primarily due to FAFSA delays which shifted several students into the first two starts of the first quarter. We experienced more normalized levels of growth throughout the remainder of the quarter. Turning to our financial performance.

First quarter revenue on a consolidated basis increased 15.3% year over year to $201.4 million. Concord contributed $70 million an increase of 17.9% over the prior year quarter. While the UCI division contributed $131.5 million an increase of 14% over the prior year quarter. from a profitability standpoint, consolidated net income for the first quarter was $22.2 million or $0.40 per diluted share.

Adjusted EBITDA for the first quarter was $35.5 million a year over year increase of nearly 45%. As Jerome discussed earlier, we shifted some of our strategic initiatives planned for the first quarter into the second quarter which led to lower than anticipated spend for the period.

This change in expense timing combined with the growth in average full time active students and revenue overachievements drove our performance on our bottom line. As we remain committed to our ongoing strategic initiatives planned for this year. We do still expect to spend those investment dollars throughout the remainder of the fiscal year.

At the end of the quarter, we had $54.4 million shares outstanding total available liquidity at the end of the quarter was $246 million including $74 million of remaining capacity on our revolving credit facility. We also paid down an additional $5 million our revolver in the first quarter ending with positive networking capital of $28.5 million.

First quarter, 2025 operating cash flow was $23 million and adjusted free cash flow was $18.9 million. Year-to-date capital expenditures were $3.3 million which was below our original expectations due to timing. However, we still expect to spend approximately $55 million in total CapEx this year.

Building on our consistent execution and the strong momentum. So far this year, we are raising the guidance ranges we set for fiscal 2025. Starting with revenue we are raising our expectations to between $810million and $820 million for fiscal 2025 or approximately 11% year-over-year growth at the midpoint.

This reflects the Q1 increase in average full time active students from the program editions across both divisions with total new student starts in fiscal 2025 now expected to range between 28500 and 29500 Following this higher revenue growth in Q1, we now expect growth in the upper single digits in Q2 followed by double digit growth in the remaining quarters for start.

We anticipate double digit growth in Q2 with mid to low single digit start growth each quarter thereafter for fiscal 2025 we are raising our net income expectations to a range of $54million to $58 million with diluted earnings per share projected between $0.96 and a dollar four.

We expect 2025 full year adjusted EBITDA to now range between $122million and $126 million or around a 20% year-over-year increase at the midpoint.

While we are pleased with our adjusted EBITDA performance this quarter, the bulk of the out performance is attributed to the in year timing of our various initiative investments. Consequently, we anticipate that adjusted EBITDA will normalize throughout the year as we make these strategic initiative investments.

Further, we still expect to incur the necessary growth expenses to drive our North Star strategy during fiscal 2025 and 2026. We anticipate 2025 full year adjusted free cash flow to now range between $60million- $65 million, which continues to assume approximately $55 million in CapEx spend.

We still expect the bulk of our cash generation and year-over-year growth to materialize in the fourth quarter consistent with our historical cadence.

Looking further ahead, I'll also reiterate our collective excitement as we enter phase two of our North Star strategy, this fiscal year, we're executing on our growth investments for fiscal 2025. And as discussed previously, expect to see those investments increase in the next few years as we continue to add new programs and campuses.

It's important to reiterate that as we advance through the next few years of our growth strategy and continue to strategically invest at both Concord and UTI. Both our CapEx and strategic investments will grow materially as always. In addition to this earnings call transcript, we encourage everyone to review our press release financial supplement and investor presentation as well as the 10-Q. Once it is filed, these materials include the most current information our consolidated and segment actual results. Our strategic road map and our guidance.

Thank you to our students, team partners and investors for their ongoing support.

I'll now turn the call back over to Jerome for closing remarks.

Thank you, Christine. Looking ahead. We're excited to continue this next phase of our journey.

In addition to continuing our relentless focus on execution optimization and driving student outcomes. Our organic growth initiatives continue to revolve around one, working towards expanding our campus footprint into Greenfield geographies. Two broadening the reach of existing programs and adding new in demand offerings and three growing our partner network and deepening industry relationships.

In organically, our efforts remain focused on opportunistically exploring strategic acquisition opportunities with an emphasis on enhancing our presence in health care within demand programs that will complement our concord portfolio as we've moved into the post-election environment. I'm pleased to report that we've seen a notable uptick in activity on the M&A front and we're excited about the increase in opportunities that have been presented to us.

As I noted earlier, we're proud of what we've accomplished once again this quarter and remain excited about the future. The demand for skilled professionals is growing and we are well positioned to continue driving momentum and supporting the next generation of skilled collar talent.

We have a strong plan in place, a notable track record of execution and a very healthy financial profile to continue delivering shareholder value in the years ahead.

We appreciate your ongoing support and look forward to sharing more about our exciting progress. As always, we're happy to host campus tours and provide a closer look at the impactful initiatives we're pursuing. So please feel free to reach out if you'd like to visit.

I'd now like to turn the call over to the operator for Q&A operator.

Ladies and gentlemen, at this time, we'll begin the question-and-answer session.

(Operator Instructions)

Our first question today comes from Alex Paris from Barrington Research. Please go ahead with your question.

Thank you and thank you for taking my questions. And a hearty, Congratulations on the strong start to the new fiscal year.

Thanks, Alex.

Yeah, thanks. First question new campuses. So just to be clear, the first one was the co-branded campus with Heartland. The second campus was just announced, I think it was this morning. Atlanta, I just wanted is that the first campus that you guys are going to have in Georgia?

It is okay. So it's, it's a not only a new campus, but it's a new state expansion as well.

Yeah, it's, it's completely Greenfield for us, we see a lot of opportunity, job growth. The demographics are, are great in that area and we found what we believe is a fantastic location. So we're really looking forward to it and as we said in the, in the prepared remarks, this will you know, optimized, comprehensive set of, of UTI products, auto diesel and, and the full skill trades complement.

Great. So my question is the third which is not yet announced is, is that targeted to be a UTI campus kind of concord or we just don't, you're just not telling us yet.

Well, it's a UTI campus as we've also outlined in our past notes, we're not going to be able to open any Concord campuses likely until 2027 due to the growth restrictions from the merger that we had. So these first two in '26 are UTI campus, of course, the Heartland Concord co- branded campus is able to open because it is a non title four entity initiative.

Got you and the third campus, would that be a Greenfield state or would that be an additional campus in an existing state?

Well, I hold tight there. We're, we're pretty close to being able to announce it. We'd like to, get a couple of things across the finish line before we put an exact location in. But we'll, we won't keep you waiting much longer, Alex.

Okay. Thank you. And then, and then a question about the North Star Two strategy, you've given us targets for fiscal 2029 which among other things includes about 600 basis points of adjusted EBIT margin expansion from roughly 14% last year to nearly 20% in fiscal 2029. I got assume, with this level of new campus activity as well as this level of new program expansions. That expansion won't necessarily be linear.

Am I right on that?

No, it definitely won't be in the new year. They'll, they'll be a contour to the expansion. You'll see more more strategic investment in '25 '26 and '27 as we are, are beginning to invest in the '26 '27 '28 campuses and, and they then become, a creative in '27 '28 and '29. So you'll see a bit of a bend in terms of our e trajection trajectory in '26 moving into '27. But then as the these tranches of, of campuses and programs take off, that's when you really see the acceleration '28 '29.

Great. That makes sense. And then last question, it is sort of what you were saying towards the end of the call, the M&A pipeline, the activity post election. You said you're looking primarily on the health care side, primarily to add to the Concord offerings. What other color can you offer us there? You're looking for allied health care nursing graduate programs.

As I said, I'm Alex. It's a great question, as I said on previous calls is, is that, the concrete acquisition got us wrong portfolio of allied health, meaning non nursing, health care, disciplines and programs and dental. And, and what we didn't get was a lot of nursing students. Well, nursing only on two of our campuses at the 17.

And so, one of the things we've also said is, is that, we'd like to be a larger player in the nursing market. And so, that's a primary focus, doesn't mean that any of the targets that we've looked at don't have allied health along with nursing, but, but the primary focus would be in a sense to fill out the portfolio across all of the health care fields.

And of course, as you know, the largest and fastest growing really is, is, is nursing. And so, we're paying a particular focus there right now.

Great. That's good color. Thanks. Thanks a lot, Jerome and I'll get back in the K.

Thanks, Alex.

Our next question comes from Eric Martinuzzi from Lake Street. Please go ahead with your question.

Yeah, I wanted to follow up on the Atlanta New Campus investment. I thought I was thinking in the 100,000 square foot was sort of the footprint that you guys were targeting for these new UTI locations. And I saw Atlanta at 150,000. Was that just that was the space that was available and it was in the right area or was that the roughly the goal all along?

No, the goal was to be somewhere around, [100 115,000] square feet is, is what we see as our new optimized campus. What we mean by optimize is, a campus that not only has the transportation, auto, diesel and welding in it, but also has the rest of what came to us by way of the [MIT] acquisition.

So the electronic suite of 44 programs as well as you know, Welding HPAC aviation, etc. So you see all of that in that, in that square footage, you're right, the inventory of, of space available though this place is a little larger.

But when you, if you look at it, what it gives us an opportunity to do is take advantage of, of increasing capacity in some of the skilled trades areas where we're already seeing that we're seeing very high demand and it also gives us the opportunity

potentially to put some of our manufacture specific programs in which aren't in the, in the original optimized model. We're really excited about the location and, and the opportunity in the in this new state. And I think we're going to fill that space nicely.

Okay. And then on the guide based on your comments, Christine for the second quarter, you talked about upper single digits. So I just did quick math on using an 8% number but I was coming out with roughly $199 million which is slightly above the Q2 consensus is that in the ballpark where you were targeting?

No I think a little bit lower than that they're close. Okay?

Okay.

Alright, so 7% would be a 197 and we're still in the neighborhood then.

That's the a good.

Neighbor.(multiple speakers)

Okay. And then the expense I just want to make sure I've got this sized up in Q1. You guys came in and operating expense. I think it was 174. I overshot my own model. I think I was at 179. But that outlook for Q2, what's the snap back in the investments that you held off on in Q1? Can you size that either percent margin wise or raw dollar wise for Q2?

I'd say about quarter over quarter. It'd be about $10 million more.

Got it.

Okay. Thanks for taking my question.

Sure.

Sure. Our next question comes from Michael Crandall from Northland Securities. Please go ahead with your question.

Hey guys, thanks and congrats on another nice quarter. I wanted to dig into new new starts a little bit, at Concord, they were up 26% and you guys called out marketing efforts and admission efforts. You've called that out for a couple of quarters now and I know you're kind of turning the dial up there. Can you talk a little bit about what you're doing specifically and, and, and maybe how much more is left?

Yeah. Well, you're, you're exactly right. Which is, we're continuing to turn the dial in collaboration with the marketing organization, the agencies we use it at Concord, looking for more innovative ways to reach out to, to more students in those local local markets.

And we're seeing as you can see from the results this last quarter, we're continuing to see nice results out of it. You know, calling the hard pack is a really difficult thing to do, right? Because we're going to continue to, to invest and we're going to continue to invest more aggressively in it. You know, continuing to look for that. So two things will happen.

One, we will start to see some diminishing returns somewhere along the line. Remember, health care is a very local, a very local endeavor students don't tend to travel more than 10 to 20 miles to go to a health care school. And so there's, there's going to be some population demographics that may, that may start to see some bending in terms of that.

And then there, there are some, some areas that have caps where we're not allowed to enroll more students in it. And we're, we're approaching that, that doesn't mean we won't then subsequently work on once you're reaching the caps on increasing the caps because the demand for these, graduates is still very, high.

we're going to, we're going to keep turning the dials as you, as you called it. And you know, I can't tell you exactly where we, where we hit the bend. But, but we will and then also, you know, there's this cap, this cap issue. So, well, we'll have to play one quarter by each.

Got.

It. And then Jerome, from time to time you've talked a little bit about the macro environment and gosh, if we go back two years, the trades kind of had some headwind against them and, and maybe starting early 24 more positive articles about trades versus four year schools. You know, I think about that time you described the macro is maybe more neutral. Has that neutral become a tailwind yet? Or I guess I'd love to hear kind of your update on how you feel about the macro and kind of trades versus for your school.

How about this? We're, we're playing in a very healthy environment right now, right. You know, whether, whether I'm feeling the wind at my or my back on that is, is a day to day is a day to day occurrence. But, but, the friction is, is clearly, is clearly subsided. It's a healthy environment.

We're having great conversations with students, weighing the differences between potentially a four year liberal arts education and, and getting to work within a year making a good wage. And, and there's been a lot of positive press in the direction of people

being more practical and thinking about the these you know, these vocations as you know, a great alternative and, and the demand for these as we call skilled collar workers continues to increase. And so, we're, we're having much better conversations. Our lead flow is quite high.

We're thrilled with where we, where our lead flow is this year even, at the investment levels in which we expected to make rather than increase investment levels. And, and I think you can also tell by the, by increasing the investment levels in that lead flow that we're sensing that we have an opportunity to really take advantage of, of some trends in the market. We're, we're doing that.

Yeah, definitely.

Okay. Hey, thanks a lot.

Sure.

Our next question comes from Steven Frankel from Rosenblatt. Please go ahead with your question.

Thanks from.

Looking. At that M&A landscape.

That's out there that I appreciate the comments that activity picked up. What are the price expectations like of the sellers are, do you, are there any reasonable expectations out there or do you think there's going to be a bit of a back and forth process to get to the kind of multiples that you're comfortable paying?

Well? You know, I guess my, my point of view on is my, my bet is there will be a few transactions over the next year and, you know, I understand that it takes a while with the regulatory environment, no matter who's in charge to, to, to move transactions over the over the finish line. My gut would be that there will be a couple of transactions this year.

Our participation in that really does have a lot to do with a couple of things. One would be those multiples and frankly, we're hearing more reasonable numbers. Now, that we're out there, we're still, never totally satisfied with what you hear, but we're hearing more reasonable numbers.

And the second thing that we're maniacally focused on is that the target needs to have really great outcomes that you know, we've built up a reputation of executing at a high level over 70% graduation rate, 85% employment rates. These are very good numbers and we want to make sure that two things, one, we're not diluting our shareholders by pricing, getting priced out of, a market.

And number two, that we're not diluting our outcomes, which we think is significantly what drives our business.

That, that makes sense.

And then on, That. Outcome issue, where are you today in employers [jostling] each other to get in front of your students? Are we still in an environment where you're seeing better offers, better [tuition] reimbursement, things like that from potential employers or has that settled?

One of our main strategies has actually been to bring the employers into the process much earlier and and, and join with our students during their educational process. One good example of that is Tesla coming into our Long Beach campus with their collision repair program.

They are paying for the students to go through those programs and, and, and taking collision repair graduates through their finishing program that bringing them down into the process with them is, is doing two things.

One, it's giving students more confidence that they're going to get a job and it's also increasing the competition among our employers because they're, frankly afraid that the good ones will be gone by the time the end of the process is there. And so that's all helping wages grow.

That's great. Thank you So much.

Once again, if you would like to ask a question, please press star and one, our next question comes

from Jasper bid from Truist. Please go ahead with your question.

Hey, good afternoon. Everyone wanted to ask how we should think about the respective new enrollment growth rates for UTI and Concord segments. And the new guide, does that assume Concord continue to outperform UTI or how would you frame those relative growth rates?

Yeah, I think, proportion. If you look at the over achievement in Q1, it was proportionate. Now, one of the things we called out was that the UTI, enrollment increase bruces, our expectations had a lot to do with people moving from the fourth quarter to the first quarter because of [bafa] delays and frustrations around that. And as I said, we're seeing, you know, pretty much, UTI is operating to plan and, again, we've owned UTI for 60 years.

There's a lot, 65 there's a lot more, predictability around what UTI is doing while we're continuing to, turn the dials on, you know, testing how much elasticity there is in the demand in the health care space. And so, as we projected, we see a probably larger increase on the, organically ,on the concrete side while we continue to do that.

Thanks for that. And then, to confirm something from earlier question, the expense was supposed to hit in Q1 that was deferred out of the quarter was $10 million and you're expecting that should all hit in the second quarter, maybe beyond that clarification. Just how should we think about the caves of margins over the next couple quarters implied in the guide.

But it's, it's probably maybe $10million to $15 million and.

But it, but that's not everything that pushed. We expected to spend more in the second quarter. It's, probably only closer to $5million or $6 million of the, money that deferred out of the first and into the second.

So, second quarter was going to be higher anyway. And it's even higher because ,of the timing of the expenses that we didn't get going in Q1 that we're already, focused on right now in Q2 and into Q3.

Okay. So, the deferred expense is $5million to $6 million and the sequential increase is 10 to 15. Okay. Yeah, that makes sense and just any.(multiple speakers)

Color on. (multiple speakers)

Oh, go ahead.

Yeah, I was just following up is any color on how we should think about margins in the Third and fourth quarter or how you see that trending over the balance here.

Christine will handle that one for you contour the margins throughout the year or Matt.

Yeah, they drop, they'll be, in terms of even the margins, probably low double digits for second and third quarters and then you'll see, our seasonal jump in the fourth quarter. We will be, upper teams is what we'd expect.

Okay, great. Thank you.

Alright. Thanks Jasper. Thanks for calling. Appreciate it.

And ladies and gentlemen, with that, we'll be concluding today's question and answer session. I'd like to turn the conference call back over to Jerome Grant CEO for closing remarks.

Thank you very much operator. We appreciate everyone's attention and taking their precious time out of their day to listen to us. We are looking forward to once again reporting three months from now. So thank you very much.

Ladies and gentlemen, with that, we'll conclude today's conference call and presentation. We do. Thank you for joining you. May now disconnect your lines.