Universal Technical Institute, Inc.

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Universal Technical Institute, Inc.

20410 N. 19th Avenue
Suite 200
Phoenix, Arizona 85027
Telephone: (623) 445-9500
Toll Free: (800) 859-7249
Fax: (623) 445-9501
Web site: http://www.uticorp.com

Public Company
Employees: 2,300
Sales: $310.8 million (2005)
Stock Exchanges: New York
Ticker Symbol: UTI
NAIC: 611519 Other Technical and Trade Schools

Universal Technical Institute, Inc., operates schools in eight states that train students to be automotive, collision, diesel, motorcycle, and marine repair technicians. The firm also runs more than 20 training centers in partnership with such manufacturers as Porsche, Volvo, Mercedes-Benz, Toyota, Ford, Kawasaki, and Harley-Davidson to service their products, and operates the NASCAR Technical Institute in association with the racing organization. The company trains more than 15,000 students annually.


The origins of Universal Technical Institute (UTI) date to 1965, when Robert I. Sweet founded an auto repair training school in Phoenix, Arizona. The small firm began with a single building and an initial class of 11 students. In 1968 the school's offerings were expanded with an automotive and diesel repair program, and the following year air conditioning and heating repair training were added.

In 1980 a division called the Custom Training Group was created to provide onsite instruction for corporate technicians. Three years later a second campus opened in Houston to train students in automotive and diesel technology, and in 1986 a new building was added for the firm's air conditioning technology program. In 1987 a 14,000-square-foot high-tech facility was added in Houston to train mechanics for Chrysler, Dodge, and Plymouth dealerships in southern Texas, and in 1988 UTI opened a school near Chicago in Glendale, Illinois, that offered automotive, diesel, and air conditioning service training.

UTI's programs attracted students who might not attend college, but wanted a higher-paying job than a high school diploma alone could yield. With competition from similar for-profit schools as well as local community colleges that charged much lower tuition, the company budgeted 26 percent of its revenues for recruitment, using print and television advertisements as well as a network of recruiters in 38 states. Unlike similar schools whose recruiters received a commission when they signed a student, UTI had a progressive fee that was paid in full upon graduation. This encouraged recruiters to sign individuals who were less likely to drop out or default on their student loans, though even with such efforts students at the Houston campus had a default rate of more than 30 percent in the late 1980s. Three-fourths of the total received government loans.

In 1990 president and 11-year company veteran Robert Hartman was named CEO. Concerned about developing a strategy for the future, Hartman decided to add a board of directors to help advise him in this area. He recruited a group that included several former CEOs and a corporate psychologist, and with their input and that of his staff the firm boosted enrollment while cutting out some expensive but less effective recruiting programs.

By 1995 some 4,000 students were taking UTI classes each year. Tuition was priced at about $10,000, with the longest course of study lasting 63 weeks. The firm had annual revenues of $34 million.

As automobile manufacturers began adding computers, pollution control devices, airbags, and other complicated new systems to their products, car dealerships found it harder and harder to locate qualified service personnel. In 1996 BMW of North America formed an alliance with UTI to develop the Service Technician Education Program (STEP). The carmaker would train instructors and provide the school with cars to work on, while UTI added a new facility in Phoenix to house the school. Graduates of the six-month extended program, who were chosen from the top 5 percent of UTI trainees, could expect initial wages of $15 to $17 per hour and signing bonuses of up to $4,000. BMW dealerships had previously spent as much as $4,000 training each mechanic, while diverting experienced service personnel from their work. They would pay the car manufacturer $7,500 per technician for their training via UTI.


In early 1998 the company was recapitalized with an investment from The Jordan Company and senior management to fund the $26.3 million purchase of Clinton Harley Corporation, which owned the Motorcycle Mechanics Institute and Marine Mechanics Institute (MMI). Founded in 1973, MMI had campuses in Phoenix and Orlando, Florida, and working relationships with manufacturers like Harley-Davidson, Kawasaki, and Yamaha. After the merger, Clinton/MMI President John C. White would take the positions of chief strategic planning officer and board chairman of UTI.

The year 1998 also saw the firm expand to California with a new campus in Rancho Cucamonga. Located in a 72,000-square-foot building, it would employ 60 instructors and support staff, with an initial enrollment of 200 taking a special graduate level Mercedes-Benz technical program. An alliance with Peterson Companies' Hot Rod Magazine enabled the company to offer a course in "super street high performance" to all of its 5,300 students, as well. UTI was looking to boost enrollment, and increased its staff of recruiters from 80 to 120. They visited shop and vocational education programs at 8,000 high schools around the United States.

In May 1999 UTI and racing organization NASCAR formed an educational partnership to train technicians in automotive and collision repair, with some students gaining internship opportunities with racing teams. Classes would begin in 2000 at UTI's Houston campus, with a dedicated training facility planned for North Carolina, where more than three-fourths of the NASCAR racing teams were headquartered.

During 1999 UTI also reached agreements to provide specialized training programs for carmakers Porsche, Jaguar, Volkswagen, Ford, and Honda, and added a new collision repair and refinishing technology facility to its Houston campus. DuPont Performance Coatings would supply the latter with equipment, grants, job placement, and curriculum development assistance. For 1999 the company's revenues topped $78 million. UTI employed more than 800.


We are industry's choice for providing professional technicians for the customers we serve in the automotive, diesel, collision repair, motorcycle and marine industries, and related aftermarkets. We set the standard in professional and technical education, lifelong learning and employment services.

Demand for mechanics was still far outstripping supply, and the firm's graduates had little or no trouble finding jobs, especially those in its automaker-sponsored programs. An estimated 70,000 new mechanics were needed each year out of a total of 700,000 employed in the United States. Whereas some of the openings were created by retirement, many were due to older workers leaving the field because they could not keep up with the growing complexity of automotive systems.

In October 2000 UTI sold its Glendale Heights, Illinois, training facility to W.P. Carey & Co., which would then lease it back to the firm. It was the second such transaction the company had completed with Carey. New training partnerships formed during the year included Audi, Volvo, and truck maker Navistar International.

In 2001 new buildings were added to UTI's Pennsylvania, Illinois, and Florida campuses, with the latter dedicated to Harley-Davidson and marine technician training. The company also formed an educational partnership with Toyota/Lexus during the year, and dropped a computer-aided drafting program it had been offering.


In 2002 UTI was recapitalized with an investment of $45.5 million from Charlesbank Capital Partners and Penske Capital Partners, each of which took a sizable minority ownership stake. At the same time the company's debt was refinanced with a new $70 million credit facility.

In May the new NASCAR Technical Institute opened in Mooresville, North Carolina, in a $12 million, 146,000-square-foot facility that would be owned by W.P. Carey & Co. and leased back to the firm. It could train up to 1,800 students per year in 57- and 69-week programs, with scholarships available from a variety of sources, including automaker Dodge.

Also during 2002, the firm expanded its Florida and Phoenix campuses and relocated all air conditioning repair classes to the latter due to declining enrollment. Annual revenues topped $144 million, and a profit of $9.7 million was recorded. It was UTI's first profitable year since MMI had been acquired.

In 2003 the company announced plans to spend $54.2 million to expand its facilities around the country and hire up to 100 new instructors. The firm subsequently broke ground on a new $21 million, 287,000-square-foot campus in Avondale, Arizona, which would consolidate its Phoenix area teaching operations. The facility would employ 200 and accommodate 3,000 students. UTI's corporate headquarters subsequently moved into a new, larger space in Phoenix. The company had annual enrollment of 10,500 students.

With demand for auto technicians still surging, in August the firm announced that it would completely discontinue air conditioning repair training and sold the program's equipment to crosstown rival Refrigeration School, Inc. The company also partnered with continuing education and online learning institution the University of Phoenix during the year, which would give credit for UTI courses to its students.

In October 2003 the company's board appointed Kimberly McWaters CEO. Hired as a part-time receptionist in 1984, she had risen through the ranks to become president in 2000.


In December the firm made an initial public offering on the New York Stock Exchange. Some 7.5 million shares were sold, more than half of which came from existing shareholders. The $60.1 million raised by the company was primarily used to pay down long-term debt brought on by the acquisition of the motorcycle and marine training programs in 1998.

In July 2004 UTI opened a new 160,000-square-foot campus near Philadelphia at Exton, Pennsylvania, that could accommodate up to 2,000 students and a staff of 200. The firm was already offering advanced training for automakers nearby. UTI also boosted the capacity of its Florida campus and added automotive repair training there during the year, and began a relocation of its California campus that would nearly double its capacity to 2,000 students. The company subsequently boosted the number of recruiters in the field to 150 to help fill the additional seats.


Robert I. Sweet founds an automotive training school in Phoenix, Arizona.
An air conditioning repair program is added.
Custom Training Group is founded.
The Houston campus opens.
A Chicago-area campus is added.
Jordan Co. buys a stake in the firm; MMI is acquired; a California campus opens.
Charlesbank and Penske buy stakes; the NASCAR Technical Institute opens.
An initial public offering is made; air conditioning training ends.
A New Exton, Pennsylvania, campus opens.
Sacramento, California, and Massachusetts campuses open.

In September the firm introduced a new part-online learning program called FlexTech and bought a 170,000-square-foot facility near Boston, Massachusetts, for $12.4 million. In November, a 22.5-acre site near Sacramento, California, was leased to serve as a new campus in that state.

In 2005 the company enlarged its Exton, Pennsylvania, campus with a new 41,000-square-foot facility that offered diesel technology training and automotive training, and also expanded its Texas, Illinois, Florida, and Rancho Cucamonga, California, campuses. UTI's Massachusetts campus opened in the summer, and in October 60 students began training at a temporary facility in Sacramento, California, in anticipation of a permanent site opening there the following year. For 2005 the company had revenues of $310.8 million and a net income of $35.8 million. Enrollment topped 16,000.

In early 2006 the company initiated a $30 million stock buyback program just before its share price dropped by more than 20 percent when analysts' earnings predictions were not met. Rising gas prices and other factors were leading to a reduced outlook for car repair jobs, while the company itself had lost momentum due to problems with its advertising agency and a call center, though both were quickly rectified. In May, an agreement was signed with Nissan North America to provide specialized training. Similar agreements had been signed with Federal Express and Kawasaki Motors Corp., though carmaker Jaguar had ended its association with the firm.

More than 40 years after its founding, Universal Technical Institute, Inc., had grown to become a national leader in training auto, motorcycle, and marine mechanics. The firm operated eight regional campuses around the United States, and also had more than 20 agreements with car, cycle, and personal watercraft makers to train technicians for their brands. The company's growth was ongoing as it added new campuses and expanded others.


UTI Holdings, Inc.; Universal Technical Institute of Arizona, Inc.; Universal Technical Institute of Texas, Inc.; U.T.I. of Illinois, Inc.; Universal Technical Institute of California, Inc.; Universal Technical Institute of Pennsylvania, Inc.; Universal Technical Institute of Northern California, Inc.; Universal Technical Institute of North Carolina, Inc.; Universal Technical Institute of Massachusetts, Inc.; Universal Technical Institute of Phoenix, Inc.; Custom Training Group, Inc.; Clinton Education Group, Inc.


Corinthian Colleges, Inc.; Lincoln Educational Service Corporation.


Boyer, Trevor, "Move Is on to Train More Technicians," Ward's Dealer Business, December 1, 1999, p. 75.

Conlin, Elizabeth G., "Pieces of Advice," Inc., May 1, 1995, p. 57.

Fahey, Jonathan, "Bumper-to-Bumper Education," Forbes, September 6, 2004, p. 77.

Harris, Donna Lawrence, "BMW Wants a Few Good Techs," Tire Business, April 28, 1997, p. 6.

Kisiel, Ralph, "Retirements Create Service Technician Shortage," Automotive News, August 2, 2004, p. 32.

"NASCAR Tech Institute Should Ease Tech Shortage," Aftermarket Business, July 1, 2002, p. 8.

"NASCAR, UTI to Address Shortage of Technicians," Aftermarket Business, November 1, 2000, p. S66.

Siegel, James J., "UTI Takes on Recruitment," Air Conditioning, Heating & Refrigeration News, June 24, 2002, p. 13.

"UTI Expands Automotive Training," Techniques, February 1, 2005, p. 11.

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Universal Technical Institute, Inc.