What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2021-12-02 compared with 2020-12-03 · 164 added, 118 removed, 432 unchanged (39% of the section changed)

Universal Technical Institute, Inc.

(“we,” “us” or “our”) is the leading provider of postsecondary education for students seeking careers as professional automotive, diesel, collision repair, motorcycle and marine technicians as measured by total average full-time enrollment and graduates.

We also provide programs for welders and computer numeric control (“CNC”) machining technicians.

We offer certificate, diploma or degree programs at 12 campuses across the United States under the banner of several well-known brands, including Universal Technical Institute (“UTI”), Motorcycle Mechanics Institute and Marine Mechanics Institute (collectively, “MMI”) and NASCAR Technical Institute (“NASCAR Tech”).

Founded in 1965, with more than 225,000 graduates in its history, Universal Technical Institute, Inc.

(“we,” “us” or “our”) is a leading provider of transportation and technical training programs.

As of September 30, 2021, we offered certificate, diploma or degree programs at 12 campuses across the United States under the banner of several well-known brands, including Universal Technical Institute (“UTI”), Motorcycle Mechanics Institute and Marine Mechanics Institute (collectively, “MMI”) and NASCAR Technical Institute (“NASCAR Tech”).

Additionally, we offer manufacturer specific advanced training (“MSAT”) programs, including student-paid electives, at our campuses and manufacturer or dealer sponsored training at certain campuses and dedicated training centers.

Founded in 1965, we have provided technical education for more than 55 years and have graduated more than 220,000 technicians.

All of our campuses are nationally accredited and are eligible for federal student financial assistance funds under the Higher Education Act of 1965, as amended (“HEA”), commonly referred to as Title IV Programs, which are administered by the U.S.

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Business Model and Industry Partnerships

Our goal is to continue to be the leading provider of postsecondary education for students seeking careers as professional technicians.

We serve students, partners and communities by providing quality education and training for in-demand careers.

We continue to evolve our business model to provide our students with accessible, affordable training with a focus on bringing education to the students at convenient locations.

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Our student recruitment efforts begin with our commitment to positive outcomes, both for our students and our industry relationships.

Our responsibility to present job-ready graduates to employers requires that we recruit, enroll and train prospective students who have the drive and potential to successfully pursue a career in their field of training.

We use a multi-touch media approach for our three primary admissions channels (high school, adult, and military) to enroll and start students, which involves national and local outreach to generate a high quality and quantity of prospective students.

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Additionally, as our campus locations do not offer housing for students, we have service professionals who leverage third-party relationships and assist our students in finding affordable housing near our campuses.

To ensure our programs provide students with the necessary hard and soft skills needed upon graduation, we have relationships with over 35 original equipment manufacturers and industry brand partners across the country to understand their needs for qualified service professionals.

To ensure our programs provide students with the necessary hard and soft skills needed upon graduation, we have relationships with over 35 original equipment manufacturers (“OEMs”) and industry brand partners across the country to understand their needs for qualified service professionals.

Through our industry relationships, we are able to continuously refine and expand our programs and curricula.

We believe our industry-focused educational model and national presence have enabled us to develop valuable industry relationships, which provide us with significant competitive strengths and supports our market leadership, along with enabling us to provide highly specialized education to our students, resulting in enhanced employment opportunities and the potential for higher wages for our graduates.

We believe our industry-focused educational model and national presence have enabled us to develop valuable industry relationships, which provide us with significant competitive advantages and supports our market leadership, along with enabling us to provide highly specialized education to our students, resulting in enhanced employment opportunities and the potential for higher wages for our graduates.

Our industry relationships also extend to thousands of local employers, after-market retailers, fleet service providers and enthusiast organizations.

Other target groups for relationship-building, such as parts and tools suppliers, provide us with a

variety of strategic and financial benefits that include equipment sponsorship, new product support, licensing and branding opportunities and financial sponsorship for our campuses and students.

As a result of the COVID-19 pandemic during 2020, we have transitioned our on-campus, in-person education model to a blended training model that combines instructor-facilitated online teaching and demonstrations with hands-on labs.

On-campus labs have been redesigned to meet the health, safety and social distancing guidelines imposed by the Centers for Disease Control (“CDC”) and state and local jurisdictions, while still meeting our accreditation and curriculum requirements.

Both the ED and the Accrediting Commission of Career Schools and Colleges (“ACCSC”) granted institutions temporary approval to offer distance learning through December 31, 2020.

To afford us additional flexibility beyond the current temporary approval period(s), we have initiated the approval process with the ACCSC and the appropriate state agencies to be able to offer distance education and a blended learning format for all of our programs on a more permanent basis.

Additionally, we continue to invest in the online delivery platform and curriculum to further enhance the student experience.

Other target groups for relationship-building, such as parts and tools suppliers, provide us with a variety of strategic and financial benefits that include equipment sponsorship, new product support, licensing and branding opportunities and financial sponsorship for our campuses and students.

We offer the majority of our programs in a blended learning model that combines instructor-facilitated online teaching and demonstrations with hands-on labs.

This blended learning format has allowed us to continue to offer our programs to our students during the COVID-19 pandemic and aligns with an increasing trend of online education now being offered as

individuals seek life-long learning opportunities.

On-campus labs are designed to meet or exceed the current national guidelines recommended by the Centers for Disease Control (“CDC”) as well as state and local mandates, while still meeting our accreditation and curriculum requirements.

Business Strategy

In support of our goal to continue to be the leading provider of postsecondary education for students seeking careers as professional automotive, diesel, collision repair, motorcycle and marine technicians, as well as welders and CNC machining technicians, and the leading supplier of entry-level skilled technicians for the industries we serve, we are pursuing a number of business strategies.

Additionally, we are focused on growth and diversification which is achieved through the expansion of new program offerings, funding models, and business operating models.

Our core business strategies are aligned with our mission to serve students, partners and communities by providing quality education and training for in-demand careers.

Additionally, as we evolve our business model, we are focused on growth and diversification achieved through acquisitions, opening new campus locations, expanding program offerings, and new funding and business operating models.

Recruit, Train and Identify Employment Opportunities for More Students

Our student recruitment efforts begin with our commitment to positive outcomes for our students and our industry relationships.

Our student recruitment efforts for prospective students are conducted through three admissions channels:

• High School:

Field-based representatives develop and maintain relationships with high school guidance counselors, teachers and administrators as well as local employers.

These representatives generate student interest in pursuing a professional technician career path and our training programs through career presentations and workshops at high schools and career fairs and inviting students and their influencers on field trips and tours of our campuses and local employers’ businesses.

Campus-based representatives serve adult career-seeking or career changing students who typically inquire with our schools as a result of our advertising campaigns.

Our military representatives are strategically located throughout the country.

These representatives focus on building relationships with military installations in order to serve the needs of those transitioning from military service.

We collaborate with employers to help prospective students and their families understand the potential career opportunities that may be available during and after completing one of our programs.

As competition for the graduates we train grows, employers are increasingly partnering with us to raise awareness of the benefits of a technician career path for prospective students.

Return on Education

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As a result, we believe we are well positioned to better meet the industry’s demand for skilled technicians.

We provide relevant services to assist students with possible tuition financing options, educational and career counseling, opportunities for part-time work while attending school, and ultimately, graduate employment.

Our national employment services team develops job opportunities and outreach, while our local employment services teams advise active students on employment search and interviewing skills, facilitate employer visits to campuses, provide access to reference materials and assist with the composition of resumes.

Strengthen Industry Relationships

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In addition, our manufacturer brand partners support our students through manufacturer-paid courses, scholarships, tuition reimbursement programs and early employment initiatives.

Recruit, Train and Identify Employment Opportunities for More Students

Our student recruitment efforts begin with our commitment to positive outcomes for our students and our industry relationships.

We use a multi-touch media approach that involves national and local outreach to generate the quality and quantity of prospective students necessary for our three primary admissions channels to enroll and start students.

Our marketing strategy leverages an integrated inquiry generation platform that focuses on generating awareness and engagement, both nationally and locally, where our website acts as the primary hub of our campaigns, to inform and educate potential students on the nature of our educational programs and the employment opportunities that could be available to them.

Currently, we advertise on television, internet search, social media, display, online video and other internet-based content, radio, billboards and in magazines.

Our student recruitment efforts are focused on three primary markets and are conducted through three admissions channels:

• High School:

Field-based representatives develop and maintain relationships with high school guidance counselors, teachers and administrators as well as local employers.

Campus-based representatives serve adult career-seeking or career changing students who typically inquire with our schools as a result of our advertising campaigns.

Our military representatives are strategically located throughout the country.

These representatives focus on building relationships with military installations in order to serve the needs of those transitioning from military service.

Affordability

We are focused on making our training more affordable and accessible through financing options, proprietary loans, institutional and relocation grants, scholarships based on need and merit, and employer sponsored training and tuition reimbursement.

We assist students in applying for any grants or scholarships available for which they meet qualifications and we engage employers in developing tuition reimbursement programs for employees in good standing.

During the year ended September 30, 2020, approximately 45.0% of our active students received a UTI-funded scholarship or grant and approximately 20.0% of active students received funding from our proprietary loan program.

We also offer financing tools and guidance for students.

To maximize student affordability and speed to completion, we are working with high schools across the nation to increase our Technical Education Institutional Grant (“TEIG”) agreements.

The TEIG agreements allow students who have completed course(s) related to their selected program of study to receive a corresponding tuition credit for up to six courses.

Our students may opt out of the courses provided they pass an Advanced Placement Opportunities Test for each selected course.

We have approximately 4,000 curriculum-specific TEIG agreements in place across the country;

this represents approximately 14% of the high schools covered by our admissions teams.

We continue to identify new opportunities to expand the volume of these curriculum-specific TEIG agreements.

In response to growing demand for trained technicians, our industry partners and employers are increasingly willing to participate in our students’ cost of education by providing them with scholarship money and relocation assistance to attend school and by offering our graduates tuition reimbursement plans and competitive compensation and benefit packages, including signing bonuses, relocation grants and tool incentives.

There are over 4,600 employer location incentive opportunities, which make our training programs more affordable for students and may provide them with valuable relationships or employment opportunities following graduation.

Growth and Diversification

Over the past 10 years, we have opened three new campuses and added our welding and CNC machining programs.

Our first welding program started in fiscal 2017, and we have added four additional locations at our existing campuses where the careers in the field are in demand.

We are expanding our welding program to two more campuses in the next fiscal year and are evaluating additional expansion opportunities.

We are intently focused on positive student graduation and employment outcomes, which are an indicator that drives student demand and ensures a high return on our students’ education investment.

Our organic growth and diversification strategy is predicated on adding new programs and new campuses in the transportation and skilled trades fields .

We also have the opportunity to pursue our growth and diversification strategy through acquisitions.

With a national higher-education market in transition, we are exploring potential acquisition opportunities that would allow us to enter new markets, expand our presence in existing markets, broaden our program offerings, enter into adjacent markets, or that could drive significant cost and operational synergies.

Our growth strategy is predicated on adding new campuses and expanding program offerings in the transportation and skilled trades fields .

We also have the opportunity to pursue our growth strategy through acquisitions.

With a national higher-education market in transition, we are exploring potential acquisition opportunities that would allow us to enter new markets, expand our presence in existing markets, broaden our program offerings, enter into adjacent markets such as other skilled trades or high demand energy, or that could drive significant cost and operational synergies.

Our diversification strategy is focused on program diversification by adding new disciplines;

evolving our instructional and delivery model to leverage enabling technologies and instructional strategies that drive student outcomes and allow the business to more effectively scale;

evolving our instructional and delivery model to leverage enabling technologies resulting in better usage of campus facilities and instructional costs per student;

executing on new instructional strategies that drive student outcomes and allow the business to more effectively scale;

and identifying and adding new ways for programs to be funded by and for students.

During the year ended September 30, 2021, we executed the following as part of our growth and diversification strategy:

• We entered into a definitive agreement to acquire MIAT College of Technology (“MIAT”) from HCP & Company.

MIAT served approximately 1,200 students as of September 30, 2021 through its campuses in Canton, Michigan and Houston, Texas.

The company offers vocational and technical certificates as well as associates degrees in fields with robust and growing demand for skilled technical workers, including aviation maintenance, energy technology, wind power, robotics and automation, non-destructive testing, HVACR, and welding.

The acquisition will enable us to further expand our program offerings into growing industry sectors and rapidly expanding fields likely to be bolstered by technological innovation and the country’s focus on sustainable energy.

The transaction closed on November 1, 2021.

• Announced and began execution on our plans to open two additional campus locations during fiscal 2022 in Austin, Texas and Miramar, Florida.

• Announced the expansion of our welding technology program to our Bloomfield, New Jersey campus (launched in July 2021), to our Mooresville, North Carolina campus (in January 2022), and plans to launch a ninth welding program later in fiscal 2022.

• Launched or expanded the following MSAT programs:

◦ The Fendt® Technician Academy, a new program with AGCO Corporation, a global leader in the design, manufacture and distribution of agricultural machinery and solutions, at our Lisle, Illinois campus.

◦ The Daimler Trucks North America (“DTNA”) Finish First program to our Orlando, Florida campus.

◦ Transition of BMW to the Fast Track program our Avondale, Arizona and Orlando, Florida campuses, with Long Beach, California launching in May 2022 and three additional locations launching by the end of fiscal 2022.

• Launched or expanded the following military base MSAT programs:

◦ Premier Truck Group Technician Skills Program, a first-of-its-kind diesel-commercial vehicle technician career skills program, for service members at Fort Bliss, a U.S.

Army post in El Paso, Texas.

◦ BMW Military Service Technician Education Program at Fort Bragg, a U.S.

Army post near Fayetteville, North Carolina.

• Purchased our Avondale, Arizona campus at the end of December 2020, for approximately $45.2 million, including closing costs and other fees, with the intention of consolidating our MMI Phoenix, Arizona campus into the same location by the end of fiscal 2022.

During May 2021, we completed the financing of our Avondale, Arizona campus which replenished approximately $31.2 million of the funds used to purchase the campus.

• Announced the future consolidation and reconfiguration of the UTI and MMI Orlando, Florida campus facilities into one site which is currently scheduled for completion by the end of the second quarter of 2022.

Schools and Programs

Through our campus-based school system, we offer specialized technical education programs under the UTI, MMI and NASCAR Tech brands.

We offer certificate, diploma or degree programs at campuses across the United States under the banner of several well-known brands.

The majority of our programs are designed to be completed in 36 to 90 weeks and culminate in a certificate, diploma or associate of occupational studies degree, depending on the program and campus.

Tuition rates vary by type and length of our programs and the program level, such as core or advanced training.

During the year ended September 30, 2020, tuition ranged from approximately $19,000 for our CNC program (lasting 36 weeks) to $58,000 for our Automotive and Diesel program with one specialized elective program (lasting 90 weeks).

During the year ended September 30, 2020, the average annual revenue per student was approximately $28,750, net of scholarships or grants funded by us.

Our schools and programs are summarized in the following table:

The table below sets forth our current locations that operate under the UTI, MMI, and NASCAR Tech brands, the year the campus opened, and the principal programs taught at each location.

Location Brand Year Campus Opened Principal Programs

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Collision Repair and Refinishing;

(1) This program is no longer enrolling new students.

The teach-out of currently enrolled students will be completed during the first quarter of fiscal 2022.

(2) Program is eligible for enrollment with programs starting during the second quarter of fiscal 2021.

(1) This program stopped enrolling new students in late fiscal 2020.

The teach-out of enrolled students was completed during the first quarter of fiscal 2022.

(2) The welding program in Mooresville is currently eligible for enrollment with programs starting during the second quarter of fiscal 2022.

New Campus Expansion

During the year ended September 30, 2021, we announced our plans to open two additional campus locations during fiscal 2022.

The location and initial programs expected to be offered at these campuses are summarized below.

Location Brand Expected Opening Initial Programs Expected to be Offered (1)

Texas (Austin) UTI Q2 2022 Automotive;

Florida (Miramar) UTI Q4 2022 Automotive;

(1) Both campuses have approximately 10,000 square feet of available space to accommodate additional programs that are expected to be added at a later date.

Description of Current Programs Offered

As previously noted, due to the COVID-19 pandemic during 2020, we have transitioned our on-campus, in-person education model to a blended training model that combines instructor-facilitated online teaching and demonstrations with hands-on lab training.

On-campus labs have been redesigned to meet the health, safety and social distancing guidelines imposed by the CDC and state and local jurisdictions, while still meeting our accreditation and curriculum requirements.

The new blended learning model not only increases access for students, but will also better prepare them to be life-long learners as technicians today perform many day-to-day tasks and continuing education courses online or on a digital device.

While the majority of our training programs have historically been completed in-person, the blended learning model is not a totally new concept for the business.

In fiscal 2010, we began delivering some of our Automotive, Diesel, and Automotive/Diesel programs in blended learning format which combined daily in-person instructor-led theory, hands-on lab training, and integrated instructor-led online learning.

This foundation enabled us to quickly pivot when our campus locations were forced to temporarily close due to the COVID-19 pandemic.

Our program offerings are further described in the table below:

Program Year Established Program Focus Job Placement

The majority of our students receive their training in a blended training model that combines instructor-facilitated online teaching and demonstrations with hands-on labs.

The blended learning model not only increases access for students, but

better prepares them to be life-long learners as technicians today perform many day-to-day tasks and continuing education courses online or on a digital device.

The table below provides an overview of the programs taught by UTI owned and operated institutions, including the year a program was first offered at one of our campuses, the focus of the program, and the type of employment the program was designed to prepare graduates to obtain.

Program Year Established Program Focus Target Job Placement (1)

Automotive 1965 Diagnose, service and repair automobiles Entry-level service technicians in automotive dealer service departments or automotive repair facilities

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NASCAR 2002 Automotive training along with additional NASCAR-specific elective courses

Entry-level service technicians in automotive repair facilities or automotive dealer service departments, or opportunities in racing-related industries

Entry-level service technicians in automotive dealer service departments or automotive repair facilities, or opportunities in racing-related industries

Welding 2017 How to weld various materials using a wide range of welding processes

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Entry-level CNC operators in the manufacturing and mechanical fabrication industries

(1) Target job placement describes the type of employment the program was designed to prepare graduates to obtain.

Graduates may also secure positions outside of the Target Job Placement, including, for example, parts associate, service writer, fabricator, paint and preparation, and shop owner or operator, among others.

Manufacturer Specific Advanced Training (“MSAT”) Programs

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Manufacturer-Paid MSAT Programs Offered Location

BMW Service Technician Education Program (STEP) Avondale, Orlando

BMW Service Technician Education Program (STEP) (1)

Avondale, Orlando

Fendt Technician Academy by AGCO (2)

Mercedes-Benz DRIVE Mercedes-Benz facilities in Long Beach, California, Jacksonville, Florida, Robbinsville, New Jersey and Grapevine, Texas

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Volvo Service Automotive Factory Education (SAFE) Avondale

(1) The BMW STEP program is being replaced in fiscal 2022 with the BMW FastTrack Program, a student-paid MSAT program.

The FastTrack program is targeted to expand the BMW footprint to six UTI campuses, with Avondale and Orlando launching in January 2022, Long Beach launching in May 2022, and three additional locations launching by the end of fiscal 2022.

(2) The Fendt Technician Academy, which is exclusive to UTI, launched in September 2021.

Student-Paid MSATs

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Cummins Power Generation Avondale

Daimler Trucks Finish First Program Avondale, Lisle

Daimler Trucks Finish First Program Avondale, Lisle, Orlando

Ford Accelerated Credential Training (FACT) Avondale, Rancho Cucamonga, Sacramento, Orlando, Lisle, Mooresville, Bloomfield, Exton, Houston

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Mopar TEC by Fiat Chrysler Automobiles US LLC Mooresville

Nissan Automotive Technician Training (NATT) Long Beach, Orlando, Moorseville, Houston

Toyota Professional Automotive Technician (TPAT) Sacramento, Lisle

Toyota Professional Automotive Technician (TPAT) Lisle, Rancho Cucamonga

Student-Paid MSAT Programs Offered Location

American Honda Motor Company, Inc.

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Additionally, to be considered, candidates must be within six months of their separation dates from the military.

There is no tuition cost to the participating

service members.

There is no tuition cost to the participating service members.

We currently offer the following military base programs using vehicles, equipment, specialty tools and curricula provided by and/or developed in collaboration with certain manufacturer brand partners:

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BMW Military Service Technician Education Program Marine Corps Base Camp Pendleton in California,

Army Base Fort Bragg in North Carolina

Penske Premier Truck Group Technician Skills Program Fort Bliss in El Paso, Texas

Affordability and Accessibility

During the year ended September 30, 2021, tuition ranged from approximately $20,000 for our CNC program (lasting 36 weeks) to $60,000 for our Automotive and Diesel program with one specialized elective program (lasting 90 weeks).

During the year ended September 30, 2021, the average annual revenue per student was approximately $29,200, net of scholarships or grants funded by us.

During the year ended September 30, 2021, approximately 42% of our active students received a UTI-funded scholarship or grant and approximately 23% of active students received funding from our proprietary loan program.

To maximize student affordability and speed to completion, we are working with high schools across the nation to increase our Technical Education Institutional Grant (“TEIG”) agreements.

The TEIG agreements allow students who have completed course(s) related to their selected program of study to receive a corresponding tuition credit for up to six courses.

Our students may opt out of the courses provided they pass an Advanced Placement Opportunities Test for each selected course.

We have approximately 4,000 curriculum-specific TEIG agreements in place across the country.

This represents approximately 2% of the high schools covered by our admissions teams.

We continue to identify new opportunities to expand the volume of these curriculum-specific TEIG agreements.

There are over 4,800 employer location incentive

opportunities, which when made available make our training programs more affordable for students and may provide them with valuable relationships or employment opportunities following graduation.

Student Enrollment

We enroll students throughout the year, and courses start every three to six weeks.

For the year ended September 30, 2020, our average full-time enrollment was 10,462, representing a decrease of approximately 2.0% as compared to 10,674 for the year ended September 30, 2019.

At September 30, 2020, our ending full-time enrollment was 12,524, an increase of 1.3% from our ending full-time enrollment of 12,363 at September 30, 2019.

For the year ended September 30, 2021, our average number of undergraduate full-time active students was 11,489, representing an increase of approximately 9.8% as compared to 10,462 for the year ended September 30, 2020.

At September 30, 2021, our end of period number of undergraduate full-time active students was 13,682, an increase of 9.2% from our ending full-time enrollment of 12,524 at September 30, 2020.

Currently, our student body is geographically diverse.

While our campus locations attract local students that live within 50 miles, we estimate that 50% of our students elect to relocate to attend our programs.

While our campus locations attract local students that live within 50 miles, we estimate that approximately 50% of our students elect to relocate to attend our programs.

Due to the seasonality of our business and normal fluctuations in student populations, we expect variability in our quarterly results.

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We count a graduate as employed based on a verified understanding of the graduate’s job duties to assess and confirm that the graduate’s primary job responsibilities are in his or her field of study.

We verify employment by sending written verification requests to the graduate and/or the employer.

The verifications must include employer name, job duties, job title, hire date and employer contact.

We verify employment by sending written verification requests to the graduate and/or the employer or collecting written information with all required elements.

Verifications must include employer name, job duties, job title, hire date and employer contact information.

Once we receive written verification from either source, the graduate is classified as employed in field as long as all verification requirements are met.

If any information provided in a written format requires clarification, a call is made to clarify certain elements with notes documented in our student database.

In instances where we are unable to obtain written verification, we also classify graduates as employed in field if we are able to obtain verbal verification, collecting the same information as noted above, from both the graduate and the employer.

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Graduates employed 5,176 6,763

(1) The decrease in the graduate employment rate from fiscal 2019 to fiscal 2020 was due primarily to the impacts of the COVID-19 pandemic on our student population and the employer community.

The for-profit, postsecondary education industry is highly competitive and highly fragmented, with no one provider controlling significant market share.

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rather, the sector as a whole provides competition.

Within the for-profit career-oriented and technical school sector, some of our national and regional competitors are Lincoln Technical Institute, Tulsa Welding School and University of Northwestern Ohio.

Within the for-profit career-oriented and technical school sector, some of our national and regional competitors are Lincoln Technical Institute and Tulsa Welding School.

We also consider other single location institutions with a larger local presence near one of our campuses to be competitors.

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As of September 30, 2021, we had approximately 1,660 full-time employees, including approximately 540 instructors, 320 admissions representatives, and 475 student support employees.

Each of our employees plays a key role in our mission to provide industry-leading postsecondary education for students seeking careers as professional technicians.

We believe that diversity and inclusion among our employees is essential in this process, as a truly innovative educational institution relies on a wealth of backgrounds and experiences to enhance student outcomes.

Each of our employees plays a key role in our mission to serve students, partners and communities by providing quality education and training for in-demand careers.

We believe that diversity and inclusion (“D&I”) among our employees is essential in this process, as a truly innovative educational institution relies on a wealth of backgrounds and experiences to enhance student outcomes.

During fiscal 2021 we hired a Director of Diversity and Inclusion who is responsible for setting the D&I strategy and roadmap to ensure that we meet our objectives both internally, of creating a company where everyone feels they belong, and externally, by working closely with our marketing and talent acquisition function to attract diverse talent.

To attract a truly diverse workforce, we strive to instill a culture where employees are encouraged to draw upon their own unique skills and perspectives when engaging with our growing and diverse student population.

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We require a specific level of industry experience in order to enhance the quality of the programs we offer and to address current and industry-specific issues in our course content.

We provide intensive instructional training and continuing education to our faculty members to maintain the quality of instruction in all fields of study.

A majority of our existing instructors have a minimum of five years’ experience in the industry and an average of five years of experience teaching at UTI.

Our average student-to-teacher ratio during fiscal 2020 was approximately 18-to-1.

This ratio decreased as compared to the prior year due to lower lab densities to meet the health, safety and social distancing guidelines imposed by the CDC due to COVID-19.

We provide intensive

instructional training and continuing education to our faculty members to maintain the quality of instruction in all fields of study.

A majority of our existing instructors have a minimum of five years’ experience in the industry and an average of eight years of experience teaching at UTI.

We employ field, military and campus-based admissions representatives who work directly with prospective students to facilitate the enrollment process.

Additionally, each school has a support team that typically includes a campus president, an education director, a financial aid director, a student services director, an employment services director and a controller.

We believe our management team has the experience necessary to effectively implement our growth strategy and continue to drive positive educational and employment outcomes for our students.

Additionally, each school has a support team that typically includes a campus president, an education director, a financial aid director, a student services director, and an employment services director.

We believe our management team has the experience necessary to effectively implement our growth and diversification strategy and continue to drive positive educational and employment outcomes for our students.

For discussion of the risks relating to the attraction and retention of management and executive management employees, see Item 1A.

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To engage in recruiting activities outside of its Home State, each institution also may be required to obtain and maintain authorization from the states in which it is recruiting students.

Each of our institutions holds the state authorizations required to operate and offer postsecondary education programs in its Home State, and to recruit in the states in which it engages in recruiting activities.

UTI is authorized to participate in the State Authorization Reciprocity Agreement (“SARA”).

SARA is an agreement among member states, districts and territories that establishes comparable national standards for interstate offering of post-secondary distance education courses and programs.

SARA is overseen by a national council (NC-SARA) and administered by four regional education compacts.

As of September 1, 2021, all states other than California are members of SARA.

Each of our institutions holds the state and/or SARA authorizations required to operate and offer postsecondary education programs in its Home State, and to recruit in the states in which it engages in recruiting activities.

The level of regulatory oversight varies substantially from state to state and is extensive in some states.

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Some states prescribe standards of financial responsibility and mandate that institutions post surety bonds.

Many states have requirements for institutions to disclose institutional data to current and prospective students, as well as to the public, and some states require that our schools meet prescribed performance standards as a condition of continued approval.

Many states have requirements for

institutions to disclose institutional data to current and prospective students, as well as to the public, and some states require that our schools meet prescribed performance standards as a condition of continued approval.

States can and often do revisit, revise, and expand their regulations governing postsecondary education and recruiting.

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Accreditation

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We strive to maintain the highest standards.

For 2020, of the approximately 650 schools accredited with ACCSC, 26 schools were awarded with the School of Excellence or Distinction status, of which five were UTI or MMI campuses.

Currently 11 of our campuses are classified as a School of Excellence or Distinction.

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All of our institutions are certified to participate in Title IV Programs.

The HEA, which authorizes Title

IV Programs, has not been comprehensively reauthorized since 2008.

Despite repeated attempts, Congress has not completed a full reauthorization since then.

In addition to HEA reauthorization, policies directly related to Title IV Programs and funding for those programs may be impacted by the annual budget and appropriations process as well as by other legislation.

At this time, UTI cannot predict any or all of the changes that Congress may ultimately make, and any of those changes could potentially have a material adverse effect on UTI’s business and operations.

In fiscal 2021, we derived approximately 68% of our revenues, on a cash basis as defined by ED, from Title IV Programs.

We derived approximately 49% of our revenues, on a cash basis, from the Direct Loan program, pursuant to which ED makes loans to students or their parents.

We derived approximately 18% of our revenues, on a cash basis, from the Pell program, pursuant to which ED

Table of C o ntents

makes grants to students who demonstrate financial need.

We derived approximately 18% of our revenues, on a cash basis, from the Pell program, pursuant to which ED makes grants to students who demonstrate financial need.

And we derived less than 1% of our revenues, on a cash basis, from the Federal Supplemental Educational Opportunity Grant (“FSEOG”) program.

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The HEA defines an “institution” as a main campus and its additional locations.

Pursuant to this definition, ED recognizes us as operating three institutions, organized as follows:

Pursuant to this definition, ED recognizes us as operating three institutions (“OPEIDs”), organized as follows:

Universal Technical Institute of Arizona

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The Program Participation Agreement (“PPA”) document serves as ED’s formal recognition that an institution and its associated additional locations have satisfied this requirement, and are authorized to participate in Title IV Programs for a specified period of time.

An institution seeking to expand its activities in certain ways, such as opening an additional location or raising the highest academic credential it offers, must obtain approval from ED.

institution seeking to expand its activities in certain ways, such as opening an additional location or raising the highest academic credential it offers, must obtain approval from ED.

Every institution also is required to periodically renew its certification by applying for continued certification before its current term of certification expires.

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We received a fully recertified PPA for Universal Technical Institute of Texas in April 2018, which will expire March 31, 2022.

In November 2018, we received a fully recertified PPA for Universal Technical Institute of Arizona and a fully recertified PPA for Universal Technical Institute of Phoenix.

In November 2018, we received a fully recertified PPA for Universal Technical Institute of Arizona and for Universal Technical Institute of Phoenix.

Both of the PPA’s will expire on March 31, 2022.

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The 90/10 Rule

As a condition of participation in Title IV Programs, proprietary institutions must agree when they sign their PPA to derive at least 10% of their revenues for each fiscal year from sources other than Title IV Program funds.

A proprietary institution loses its eligibility to participate in Title IV Programs if it derives more than 90% of its revenue from Title IV Programs for two consecutive fiscal years as calculated under a complex, cash basis formula mandated by ED.

The loss of such eligibility would begin on the first day following the conclusion of the second consecutive year in which the institution exceeded the 90% limit and, as such, any Title IV Program funds already received by the institution and its students during a period of ineligibility would have to be returned to ED or a lender, if applicable.

Additionally, if an institution exceeds the 90% level for a single year, ED will place the institution on provisional certification for a period of at least two years, could impose other restrictions or conditions on the institution’s Title IV eligibility, and, under ED’s current financial responsibility regulations, could conclude that the institution lacks financial responsibility and is required to submit a letter of credit or other form of financial protection.

As of September 30, 2020, our institutions’ annual Title IV percentages as calculated under the 90/10 rule ranged from approximately 65% to 68%.

As a condition of participation in Title IV Programs, proprietary institutions must agree when they sign their PPA to comply with the 90/10 rule.

Under the current 90/10 rule, a proprietary institution is subject to sanctions if it derives more than 90% of its revenue from Title IV Program funds for a single year and loses its eligibility to participate in Title IV programs if it derives more than 90% of its revenue from Title IV Program funds for two consecutive fiscal years.

We regularly monitor compliance with this requirement to minimize the risk that any of our institutions would derive more than the allowable maximum percentage of its revenue from Title IV Programs for any fiscal year.

As of September 30, 2021, our institutions’ annual Title IV percentages as calculated under the 90/10 rule ranged from approximately 65% to 69% between our institution’s three OPEIDs.

Under the American Rescue Plan Act of 2021 (“ARPA”), a proprietary institution must derive at least 10% of its revenue from sources other than “Federal education assistance funds,” instead of from sources other than “Title IV Program funds.” The phrase “Federal education assistance funds” is broadly defined as “[f]ederal funds that are disbursed or delivered to or on behalf of a student to be used to attend such institution.” While ARPA,is current law, by the statute’s own terms, the earliest this revision to the 90/10 rule may take effect is for institutional fiscal years beginning on or after January 1, 2023.

We are currently reviewing the potential impact of this change and will be monitoring the proposed and final regulations promulgated by ED to carry out this change, which are anticipated in 2022.

Based on currently available information and reasonable expectations regarding the scope of the phrase “Federal education assistance funds” we do not believe this change will materially impact our ability to comply with the 90/10 rule.

Administrative Capability

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ED’s administrative capability standards also include thresholds and expectations for federal student loan cohort default rates (discussed below), satisfactory academic progress, and loan counseling.

Failure to satisfy any of the standards may lead ED to find the institution ineligible to participate in Title IV Programs, require the institution to repay Title IV Program funds, change the method of payment of Title IV Program funds, or place the institution on provisional certification as a condition of its continued participation or take other actions against the institution.

Failure to satisfy any of the standards may lead ED to find the institution ineligible to participate in Title IV Programs, require the institution to repay Title IV Program funds, change the method of payment of Title IV Program funds, place the institution on provisional certification as a condition of its continued participation or take other actions against the institution.

Three-Year Student Loan Default Rates

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(2) Includes other proprietary institutions beyond Universal Technical Institute.

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An institution whose cohort default rate exceeds 30% in consecutive fiscal years may be subject to conditions and restrictions, and will lose eligibility if the rate remains above 30% three years in a row.

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As of September 30, 2021, only Universal Technical Institute of Texas was subject to a 30-day delay in receiving the first disbursement on federal student loans for first-time borrowers due to a three-year cohort default rate that was 15% or greater for one of the three most recent years.

The 30-day delay was lifted as of September 30, 2020 for Universal Technical Institute of Phoenix due to the three-year cohort default rate falling below 15%.

Financial Responsibility

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as the parent company.

ED’s regulations permit ED to examine the financial statements of Universal Technical Institute, Inc., the financial statements of each institution and the financial statements of any related party.

ED’s regulations permit ED to examine the financial

statements of Universal Technical Institute, Inc., the financial statements of each institution and the financial statements of any related party.

ED has not required us currently to post a letter of credit on behalf of any of our schools.

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• The institution incurs a liability from a settlement, final judgment or final determination arising from an administrative or judicial action or proceeding initiated by a federal or state entity and, as a result of that liability, the institution’s recalculated composite score is less than 1.0 as determined by ED under procedures described in the regulations;

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• For a proprietary institution whose composite score is less than 1.5, there is a withdrawal of owner’s equity from the institution by any means (as defined by the regulations) and, as a result of that withdrawal, the institution’s recalculated composite score is less than 1.0 as determined by ED under procedures described in the regulations;

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We will continue to evaluate other compensation options under these regulations and guidance.

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Distance Education

In response to the COVID-19 pandemic, ED provided broad approval for institutions to use distance education without going through the standard ED approval process.

ED also permitted accreditors to waive their distance education review requirements.

Taking advantage of these flexibilities, we transitioned our students into blended program formats, which permitted their non-clinical training to be offered online.

ED’s temporary flexibilities currently remain in place, and will continue through the end of the payment period that begins after the date on which the federally-declared national emergency related to COVID-19 is rescinded.

However, having observed that our blended learning programs offer a range of academic, operational, and financial efficiencies, we have determined to seek the permanent approvals that will permit us to continue offering blended learning programming after the noted temporary flexibilities have expired.

We also continue to work to ensure that our blended learning programming complies with applicable distance education rules and standards, including ED’s new distance education rules, which became effective July 1, 2021.

We intend to offer our Automotive, Diesel, Automotive/Diesel, Motorcycle and Marine programs in a blended learning format on a permanent basis.

Additionally, we intend to continue to invest in our blended learning platform and curriculum to further enhance the student experience and student outcomes.

To date, we have received approval from ACCSC to permanently offer blended format programs that utilize both distance and on-ground education.

Additionally, we have received permanent approvals by all state education authorizing agencies to offer blended format programs.

Finally, we are working to secure approval from the Florida State veterans agency to classify our MMI non-degree, blended programs as resident training for purposes of VA benefits, to ensure that veterans enrolling in these programs can access their VA benefits after December 21, 2021, when applicable waivers are currently set to expire.

Title IV Program Rulemaking

ED is almost continuously engaged in one or more negotiated rulemakings, which is the process pursuant to which it revisits, revises, and expands the complex and voluminous Title IV Program regulations.

Recent and significant negotiated rulemakings are discussed below.

On May 26, 2021, ED announced its intention to establish multiple rulemaking committees and for these committees to prepare proposed regulations.

These regulations could involve revisiting and potentially revising regulations across 14 different topics areas identified by ED, including the rules governing changes in ownership, standards of administrative capability, borrower defense to repayment, closed school loan discharges, mandatory pre-dispute arbitration clauses, and gainful employment.

It is expected that these negotiated rulemakings will occur throughout 2022 and 2023, and that any resulting rules will become effective thereafter.

ED has also invited public commentary on other matters around potential gaps in postsecondary outcomes, including retention, completion, loan repayment and student loan default.

The potential outcome, if any, from these announced actions is unknown at this time.

We devote significant effort to understanding the effects of ED regulations and rulemakings on our business and to developing compliant solutions that also are congruent with our business, culture, and mission to serve our students and industry relationships.

Borrower Defense to Repayment Rulemaking

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The rules also required institutions to submit to ED copies of certain records in connection with any claim filed in arbitration by or against the school concerning a borrower defense claim and any claim filed in a lawsuit by the school against the student or by any party against the school concerning a borrower defense claim.

The 2019 BDTR Rule, which took

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effect on July 1, 2020, generally permits the use of arbitration clauses and class action waivers provided institutions make certain disclosures to students.

The 2019 BDTR Rule, which took effect on July 1, 2020, generally permits the use of arbitration clauses and class action waivers provided institutions make certain disclosures to students.

The litigation and regulatory actions that impacted the effective date for each version of the BDTR rule have made it extremely difficult to predict when and how the ban on these pre-dispute contractual provisions will be interpreted and applied by courts, particularly to litigation that precedes or spans the effective dates of the BDTR rules.

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We cannot predict the number of students who might withdraw prior to the closure of a campus and potentially qualify for a loan discharge.

As noted above, ED has announced its intent to establish multiple rulemaking committees to revisit a wide range of existing Title IV Program regulations.

One such committee, which began deliberations in October 2021, is considering revisions to the BDTR rules outlined above.

We are monitoring this process and will carefully review any proposed or final regulations promulgated by ED.

Accreditation and Innovation Rulemaking

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On November 1, 2019, ED published its final rule covering accreditation and state authorization matters, with a general effective date of July 1, 2020.

On September 2, 2020, ED published its final rule covering distance education and innovation matters, with a general effective date of July 1, 2021.

Gainful Employment Rulemaking

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On July 1, 2019, following a contentious negotiated rulemaking, ED issued final regulations that rescinded the existing gainful employment regulations, effective July 1, 2020.

However, a future administration could seek to reinstate the gainful employment rule, or some version of it.

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However, ED has announced its intent to establish a rulemaking committee to revisit the gainful employment rule.

We are monitoring this process and will carefully review any proposed or final regulations promulgated by ED.

Other Federal and State Student Aid Programs

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Department of Defense (“DOD”) and under the Workforce Investment Act.

Additionally, some states provide financial aid to our students in the form of grants, loans or scholarships.

Additionally,

some states provide financial aid to our students in the form of grants, loans or scholarships.

Our Long Beach, Rancho Cucamonga and Sacramento, California campuses, for example, are currently eligible to participate in the Cal Grant program.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business